Thursday, January 19, 2012

In this video, Homer has one peanut that he considers of great value because it's the last one that remains. But once he drops it and finds the $20 he is faced with a choice. He can get the peanut that he was longing for off of the floor and eat it, or he can use the $20 and go buy a few bags of peanuts. Homer chooses to take the $20 instead, but the opportunity cost is that even though he will get more than one peanut, he will have to wait a few minutes because he has to go all the way to the store, and there is always a chance that the store won't have any.

In this video the theory that "There is no such thing as a free lunch" is proven. Jerry's friend "gives" him a brand new suit and says he wants nothing for it, but then suggests that he is taken out to dinner at a nice restaurant. As a result Jerry has to take the man out to eat twice, and has likely spent a large portion of the cost of the "free" suit, on the man's food. When companies have sales like "buy one get one free" or "buy one get one half off" the consumer is never really getting that great of a deal. Yes, they are paying a few less dollars, but since the prices are already higher than production costs, the companies still receive a profit, and the consumer is still paying more. Thus proving, "There is no such thing as a free lunch".


Smith said...

GREAT VIDEOS!!!! Your Simpsons analogy brings up a great point. Today’s society values time more than any other good or service. Has this paradigm shift in values been forced upon us or self-imposed?

Daniella said...

I really like the videos. I admire how you used funny, not so serious videos. This is a good example that simple economic principles can be found in our daily lives. This can also show that economic ideas do not have to deal with numbers and money, but rather objects we value.

Taylor said...

Personally I feel that it is both self-imposed and forced upon us. Since the introduction of internet and other factors that gives us immediate access to the entire world, the time it takes to do many things has been has been cut in half. There fore the only way to get maximum production/profit out of anything is to be able to produce, sell, etc in a short amount of time. The reason I say that this shift is forced is that we all choose to live by it. We could easily start focusing more on the quality of products and disregard the time that it takes to build up quantity. But, I also feel that to a certain extent the value of time has been forced on us due how this countries economy has been built. It doesn’t matter how good of quality your product is, because if you cant meet consumer demand someone else will and your company will fail.