Claire and Jay are visiting a competitor’s business. The competitor wants to buy Pritchett Closets, but Claire and Jay have a different idea. The new company is focused on creating smart closets that can pick outfits for the person based on the weather and their current size. They have great technology, but they don’t have the manufacturing capabilities to fulfil all their orders. Pritchett Closets, on the other hand, has the manufacturing space, but they haven’t invested much in technology. Claire proposes that they merge instead.
It is Phil’s birthday and also the day the iPad is being released. Phil is willing to spend his birthday waiting in line to be sure he gets the new iPad, but Claire offers to do it for his birthday but instead of getting there early she falls asleep on the couch. When she finally gets to the store, they are all out, and Phil ends up wishing he had handled it himself.
Phil has plans to give Haley the perfect git for her 21st birthday – a new car. He has spent months doing research and planning without actually going in to a dealership. His work has been online and he landed an incredible deal. But Jay is convinced that he can do better. In this scene, Phil is sad because Jay made his deal fall through but Jay has a surprise. Jay did some hard core negotiating and beat that unbeatable deal…. or did he? Buying a car is different from many other markets. The price on the sticker is rarely what people pay. Instead, both buyer and seller go in to the transaction with the understanding that they will negotiate the price and features of the car.
Cam and Mitchell own a duplex. They usually rent the upstairs unit but Cam’s sister, Pam, needed a place to stay when she was pregnant so he offered it to her (rent free). This has put a bit of a strain on their relationship because she’s stayed longer than planned and they need the money from the rental.
Claire surprises Phil by purchasing the magic shop of his dreams. The previous owner sold it for very cheap, but then Claire starts to wonder if the magician had information she was unaware of. Despite the concern, this is a unique opportunity for Phil to become an entrepreneur.
Claire and Phil go to a magic shop and talk business with the legendary Mister Ekshun. The magician laments that he can’t be at the shop everyday because he’s booking “road jobs” which we should infer have a higher payoff than the shop’s profits. Phil is curious about how a magic trick works, but they need to make sure Claire (a non-magic person) isn’t able to hear the trick. Phil learns that he had an opportunity to become a magician on a cruise ship earlier in life, but Claire had never told him about the call because of how busy their lives had been.
Mitch is told by the local bait shop owner that worms are twice the price by the lake as they are in town. This is probably because people who are already at the lake aren’t willing to drive back to save a few cents, so the dock can markup the price. This implies that people at the lake are insensitive to the price, or inelastic.
Haley works for a lifestyle company with a history of selling dodgy products. The latest one is stickers. Her boss wants them tested but can’t use animals. So, she uses the next best thing – her assistants. But first, she has some really important questions to ask. This clip demonstrates the importance of labor law and regulations. Without regulations that are enforced, some employers might require workers to complete dangerous tasks. Even with regulations, this still happens. How does this clip show that Haley’s boss knows about the danger and about the regulations but doesn’t care?
Gloria and Jay are looking to sell her family’s sauce to a larger company. They each use a different tactic to make the product more appealing. In doing this, they’re trying to increase the demand for the sauce. Unfortunately, they don’t coordinate their strategies in advance and Jay blows the deal. In fact, there’s a lot of information that Gloria has hidden from Jay. She has long had a surplus of sauce that she has been keeping in storage lockers across town. Gloria has likely paid a lot of money for all of the storage. What do sellers usually do when they have a surplus? Are Gloria’s past actions consistent with traditional economic principles of rationality? Consider sunk cost and marginal costs. (Note: this scene is an example of adverse selection. Gloria knows that her product is no good but they are trying to signal not only that it’s good but also that it’s special, almost magic)
Mitch is working on a big case about the rights of vulnerable workers. In it, he argues that a company is preying on the lack of options available to people who are homeless and hiring them for extremely low wages. He believes that this is a violation of labor laws and tries to get the notice of the press. However, Cam is stealing the spotlight as a successful high school football coach who is openly gay. Traditional economics holds that trades which are voluntary (such as employment) are mutually beneficial. As such, is the company truly taking advantage of its workers or do they benefit from the employment opportunity? Political economics suggests that you cannot ignore the power inequality between the company and the workers. When a large power imbalance is present, exploitation is possible. Which is more in line with Mitch’s perspective? Traditional economics or political economics? Would the people who are homeless be helped by increasing the wage? How would that impact structural unemployment?