Video Cases - Part I

These questions are based on videos from the Canadian Broadcasting Corporation that accompany the textbook. In addition to whatever in-class use your instructor may have given them, they're available on this website for online viewing. If directed to do so by your instructor, you can answer the questions online and email the results.
     These videos are intended only for students using the 9th Canadian Edition of Macroeconomics. To view the video, you'll require a password. Refer to page 42 in your textbook and use the first word appearing in the main text column as both 'username' and 'password.' Use of the word is case-sensitive.
     The free RealPlayer plug-in is required in order to view the videos. If needed, the plug-in can be downloaded from Real.

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Coke vs. Pepsi: What happens when private companies battle for the exclusive right to sell their products in public schools.
     Synopsis: This video outlines the controversial practice of soft drink companies' signing contracts with public schools for the exclusive right to sell and market their products within the school. In return, the school receives cash funding. The following case study will analyze the first four key economic concepts (Pages 3-4 in the text). Three main ideas will be explored: 1) How high schools face scarcity, choices, trade-offs, and opportunity costs. 2) How the above concepts can be illustrated on a production possibilities curve. 3) Why this video is a good example of a normative economic issue.
     Concepts Addressed in this Video: 1) Scarcity 2) Choice 3) Opportunity Cost 4) Trade-offs 5) Production Possibilities Curve (PPC) 6) Incentives 7) Normative/Positive Statements 8) Marginal Benefit/Marginal Cost 9) Economizing Problem

Required: 1) Watch the video carefully 2) Read the key economic concepts found on pages 3-4 of the text 3) Answer the questions below, either individually or as part of a small group.

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1		(a) What material needs (or wants) does a typical public high school have? Are these wants infinite, as economics suggests? (b) What is the main resource used by public high schools to satisfy the needs and wants mentioned in part (a)? (Hint: the same resource is used by households and individuals to satisfy many of their wants!) (c) Based on your answers in part (a) and (b), does the typical high school face the economizing problem? What choices does a typical public high school face as a result?
2		Suppose that, as in the video, Pepsi or Coke approaches a given public high school, and asks it to sell its products exclusively. In return, the school will receive cash to help fund its activities. What economic tools would the school use when deciding whether or not to accept a soft drink company's offer? (Hint: Use the concepts of marginal benefit and marginal cost in your answer)
3		Suppose the public high school for question (2), above, accepts a contract with Pepsi, which will have exclusive rights to sell its products in the school. What opportunity cost might the school face as a result of its choice? Refer to teacher/student comments in the video.
4		Recently, privatization of public schools has become a big issue in Canada. In the Canadian province of Ontario, for example, the government recently announced that it was going to give tax breaks to those sending their children to private schools. Public schools have, traditionally, received most of their funding from government. However, many are now concerned that public school funding is being taken over by the private sector, as shown by the video. Do you feel the trend toward privatization of public schools is a positive or negative one? Use normative statements in your answer.
5		Production Possibilities Curve Question: Consider two goods that most high schools have need for—1) New math textbooks and 2) New computers. The following chart represents the amount of computers and math textbooks that could be produced (purchased) with $10,000 worth of government funding: Allocation Computers Math Text Books A 0 200 B 1 180 C 2 160 D 3 140 E 4 120 F 5 100 G 6 80 H 7 60 I 8 40 J 9 20 K 10 0 Use the table above to draw the production possibilities curve for computers and math textbooks for this high school? Place computers on the X-axis. How are the concepts of scarcity and choice illustrated in this model? What is the opportunity cost of increasing the number of computers purchased from two to three? What is the opportunity cost to this high school of increasing the number of textbooks purchased from 80 to 100? Suppose Coke© approaches this high school to offer the principal extra funding in return for a contract to exclusively sell its soft drinks in the school. What will happen to the original production possibilities curve as a result of this contract? Draw a new diagram to illustrate your answer. Does this provide an incentive for the high school to accept the new contract?