Season 3, Episode 11: Students often find production and costs mind numbing. This clip helps connect some of these concepts to the real world. “Wine Balloon,” owned by Eric Corti, produces a wine-preserving product. The product currently sells for $22 and costs $6.50/unit when production is at 700 units. The sharks advise that the potential to cut costs are huge and hence increase revenue. If he produces 100,000 production cost per unit will fall to $2.50. That would be a $4/unit savings! This nicely illustrates economies of scale. Students can be asked to calculate total costs using the average cost formula for both low and high production levels. Other exercises include drawing short and long run output expansion average costs curves and average fixed costs curves.
Rational Proposal
Season 5, Episode 8: James Ambler, owner of Paparazzi Proposals, values Lori Greiner’s help over Robert Herjavec’s and ultimately chooses to take less money for the same amount of equity in his company. Like any rational economic actor, he had to weigh the perceived costs and benefits of his decision, but it was not simply about dollars — he valued Lori’s input very highly. Even though he accepted less money, the entrepreneur still made a rational decision. Try pausing the clip before the entrepreneur makes his decision and ask students what they would do in this situation. Would they take the deal with Robert? Or would they reject him to have Lori on their team? Why would they make this choice? This provides an excellent basis for discussing subjective value, marginal thinking, and rational choices.
Opening the “Liddup” on Oligopolies
Season 4, Episode 21: Taylor and Jason develop an innovation for coolers, an industry with only 3 major competitors! Their idea is to put LED lights in a cooler to make it easier to find what you’re looking for in the dark. The sharks point out that they’ll never be successful selling their own coolers in such a concentrated market and will have to license their technology to one or more of the big players. This is an excellent discussion starter for oligopolistic competition and barriers to market entry.
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