Truck for Cash

20192020 Jadrian WootenLeave a comment

Walter drives to the desert to hide the cash generated by his methamphetamine enterprise but he runs out of gas. As he rolls one of the money-full barrels, he comes by a house and asks to buy the truck sitting in the driveway. Initially, the truck is not for sale but after he offers the man a large stack of money this changes. Next, we see Walter load the barrel in the back of the recently purchased vehicle. Each person/business has a reservation price at which they’re willing to sell products or services. For this lucky resident, it appears $10,000 was at or above his reservation price. If his reservation price was lower than $10,000 then he would hear producer surplus.

See more: exchange, incentives, opportunity cost, producer surplus, reservation price, supply, transaction, willingness to sell

Jesse · Macroeconomics · Money

Up for a Trade

20192020 Jadrian Wooten1 Comment

Jesse visits a gas station and, after filling up and asking for a pack of cigarettes, he realizes that he has no cash on him. He proposes a trade; a little bag of “blue” methamphetamine against the gas and cigarettes. After hesitating initially, the cashier accepts the trade. However, for the trade to take place, a mutual coincidence of wants must emerge. It does in this case. Also, note that the cashier accepts the methamphetamine under the false belief that it does not create addiction.

See more: asymmetric information, barter, currency, double coincidence of wants, exchange, gains from trade, medium of exchange, Money

Foundations · Gus · Walter

Not Worth the Money

20192020 Jadrian WootenLeave a comment

It’s time for Walter to quit so he stops by to visit Gus Fring. Gus wants to offer Walter 3 million dollars to keep making his blue meth for 3 more months, but even that amount isn’t worth it to Walt. Walter is trying to piece his life back together and believes that continuing to produce his blue meth isn’t worth the amount he’s giving up. Walter admits to Gus that he has more money than he knows what to do with. Even for the wealthy, there’s diminishing returns to acquiring more income.

See more: cost benefit analysis, diminishing returns, exchange, opportunity cost, tradeoffs

Foundations

Clothing Exchange

20192020 Jadrian WootenLeave a comment

The criminal twins are looking for new clothing so that they don’t stand out as easily in the desert. They come across a family’s clothesline and begin changing. The family easily decides that the cost of confronting the twins isn’t worth the benefit of keeping their clothes. Their silence is rewarded because the twins know the benefit of fresh clothes is worth more than the car they were driving. This exchange shows two differ sets of people considering whether benefits outweigh costs.

See More: cost benefit analysis, exchange, tradeoffs

Jesse · Supply and Demand

Storage Costs

20192020 Jadrian WootenLeave a comment

The RV needs to be stored, and Jesse is hoping that the person who helped him tow the RV away before the DEA could find it would also be willing to let him store it on his property. The issue at hand is that Jesse had earlier stolen the RV and destroyed part of the property in the process. Jesse is hoping that they can come to a new agreement on storing the RV. As before, Jesse is in a bind and needs to store the RV. He doesn’t have time to shop around, so the tow operator has the upper hand in the negotiating process. When consumers don’t have a lot of time to shop around, their demand for services is often pretty inelastic.

See more: consumer surplus, elasticity of demand, exchange, inelastic, negotiation, producer surplus, underground economy, willingness to pay, willingness to sell