Alex is unsure of what she should do with her life and she’s avoiding her mom. Jay picks up on the situation and tries to provide some guidance. Alex has been dreaming of becoming a scientist her whole life, but lately she’s dreamed up becoming a singer. She can’t have both and recognizes that to pick a path requires giving up the other option. We’ve seen this indecision with Alex when she was trying to decide whether to spend her summer interning or relaxing. Jay hints that he used to be a daredevil, but he gave it up to become an entrepreneur.
See more: counterfactual, entrepreneurism, opportunity cost, sunk cost, tradeoffs
Cam is trying to eat a bit healthier and concocts a soy-based bacon alternative called facon. Phil and Claire have to deal with an emergency, so Cam is in charge of breakfast. He insists that it his facon is indistinguishable from real bacon, but Mitch and Alex are able to tell a difference. Only in competitive markets do substitutes need to be indistinguishable from each other. If companies are operating in imperfect markets, firms can differentiate their product and still be considered a substitute.
Unfortunately for Luke, he’s allergic to soy.
See more: entrepreneurism, imperfect competition, markets, product differentiation, substitutes, tastes and preferences
Kenneth, an old neighbor who idolized Phil, comes back to visit. He tells the Dunphy family that he dropped out of college and bounced around at small jobs until he started an investment company. Haley who is currently evaluating her college options realizes that if he had gone to college, he would have become successful 4 years later. Kenneth’s opportunity cost of college would have been very high making his decision to drop out a good one.
See more: acquisitions, college, education, entrepreneurism, human capital, human capital investments, mergers, opportunity cost, tradeoffs
When adopting Lilly, Mitchell only gave her his own last name and not both his and Cameron’s because he was scared Cameron would leave. As an apology he writes a story about two monkeys adopting a panda. He and Cameron think they have found a niche market with stories for gay parents, but they realize the market is already pretty saturated after a trip to the bookstore.
See more: advertising, demand, entrepreneurism, market power, monopolistic competition, product differentiation, tastes and preferences
Haley is at a staff meeting. She’s worried that she hasn’t had enough good ideas lately. Her fear is that this will lead her boss to believe that she isn’t working hard on behalf of the company. Haley signals that she’s a good worker by suggesting that Gloria sell a family recipe to the company (NERP). Gloria has long held the recipe secret. The recipe is an example of private technological knowledge. The recipe is valuable to Gloria because of the family tradition. The recipe is valuable to NERP because it could give them an edge in the lifestyle industry. Will Gloria sell? (Note: Jay also makes a fantastic joke about the value of a bachelor’s degree that can be used for discussion on human capital).
See more: entrepreneurism, human capital, human capital investments, moral hazard, signaling, signals, technological knowledge
After a fight about decision making between Phil and Claire regarding Phil’s opportunity to manager a magic shop early in their marriage, Claire surprises Phil by buying the magic shop he originally wanted. One of the things that jumps out to Claire initially is that the previous owner sold her the shop for a very low price, which she now wonders why he was willing to do that. The economic concept of asymmetric information relates to knowledge that one party has in a transaction that the other does not possess. The concept of information asymmetry was the basis for the 2001 Nobel Prize to George Akerlof, Michael Spence, and Joseph Stiglitz.
Second to the information asymmetry, this clip serves as a basis for the discussion on entrepreneurship and competition in markets. While some businesses are started to serve the needs of an area, others are started as passion projects. The ability to owners of businesses to buy and sell their property is a critical requirement of competitive markets.
See more: asymmetric information, competition, entrepreneurism, free entry
Haley works for a lifestyle company with a history of selling dodgy products. The latest one is stickers that improve people’s moods. Haley’s boss wants them tested, but can’t use animals so she uses the next best thing – her assistants.
This clip demonstrates the importance of labor law and regulations. Without enforceable regulations, some employers might require workers to complete dangerous tasks. Even with regulations, this still happens. Haley’s boss may know about the danger of the product and the importance of regulation, but perhaps doesn’t care?
See more: entrepreneurism, incentives, labor law, product differentiation, rationality, regulation, safety, testing
Jay has a great new invention that he believes will revolutionize the closet industry. He believes he’s created a sock dispenser that will rotate his socks so that he isn’t always wearing the same socks over and over. In competitive industries, product differentiation like this can lead to short term profits – especially for early adopters.
Unfortunately, Manny brings his friend over he recognizes the potential that this new sock dispenser could provide her uncle Earn, who is also in the closet industry. Earl is a major competitor (and former partner) of Jay and he now realizes that his proprietary idea may be stolen if he doesn’t act fast.
See more: competition, entrepreneurism, innovation, market power, monopolistic competition, patents, product differentiation, proprietary technological knowledge, trade names
Haley, Phil and Luke are participating in a psychology study. Luke has convinced Phil that they should push the big red button that says “DO NOT PUSH” but Haley stops them. She says one in a million college drop outs go on to become Steve Jobs. The other 99 thousand don’t (her math is a little off). She recently dropped out of college and is having a crisis. This demonstrates several economic concepts including the importance of human capital and time inconsistency. Human capital comes from going to college but Phil reminds her that there are other sources of human capital. Time inconsistency occurs when you regret a decision in the past.
See more: behavioral, counterfactual, education, entrepreneurism, human capital, sunk cost, time inconsistency
Jay and Claire discover that Alex and Luke have started a business selling used shoes online. Jay praises Luke for taking the initiative to build a business from nothing. Claire praises Alex for making the business successful. An argument ensues that makes it clear that this is personal for Jay and Claire. Jay built a closet business but retired a few years ago and let Claire take over. Under Claire’s leadership, the company becomes even more successful and receives international acclaim. They fight over who deserves credit for the success and honors that the business currently has. The reality is that both are responsible. They both demonstrate entrepreneurialism and each played a different and equally important role in building the business. Entrepreneurs start and grow businesses. But can they admit this to each other?
See more: entrepreneurism, human capital, labor, management