Monsters Inc Economics Supply And Demand Essay Example

couldn’t rely on hydroelectric power, which then in turn caused a shortage. Therefore California experienced multiple blackouts during a few days period due to the lack on conservation of energy (Konrad).

Even though the energy crisis in Monsters Inc. is not due to weather problems, it is a very similar situation. Right from the beginning, we see that the movie starts out with an obvious economic issue, an energy shortage. The energy crisis is what steers the actions of most of the characters throughout the remainder of the movie, and just from this you can see many economic principles at work; such as the concept of marginal costs and benefits, unemployment problems, competition in the business world, and the concept of supply and demand.The two main characters, who both work at Monsters Inc. , are Mike Wazowski and James “Sulley” Sullivan.

Sulley is proudly the employee of the month, or in monster terms, the top “scarer. ” Sulley is a very meticulous worker so in the beginning when Mike wants to drive his new car to work, Sulley encourages him to walk due to the energy shortage. This can be an example of an economic decision in the real world, because when there is a recession or crisis, it affects our behavior and most people take on a different mindset and try to conserve more.People act this way because they unintentionally weigh their decisions using the concept of marginal costs and benefits. This concept says that a choice is based on the expected marginal benefit and the expected marginal cost of the action under consideration, and people as rational decision makers will change their decisions as

long as the benefit from the change will exceed the cost.

This can also be looked at as the opportunity cost; opportunity cost is defined as the sacrifice forgone by choosing one option over an alternative one that may be equally desired; or in other words, the cost of pursuing one choice instead of another. So for example, if Mike drove his car to work it would cost him energy, which is a scarce resource in the monster world at this time, just for the benefit of being able to try out his new car and have the leisure of driving and getting to work faster.However, when Sulley makes him walk to work, not only does Mike save energy, but he benefits himself in that he gets exercise and the good company of Sulley. In other words, the opportunity cost of walking to work, is Mike not being able to drive and use his new car, but in this case, the benefits outweigh the cost of having to leave the house a few minutes earlier to get to work on time by walking; therefore this could indicate why Mike decided maybe walking is a better idea after all.Another economic issue that works against the energy crisis in the monster world is unemployment.

When people start looking for jobs, the new job applicants are not well educated and they aren’t trained to the ideal level the company would want; for example, in the beginning of the movie when we see Monsters Inc. trying to train a new monster and he forgets the rule that you always have to close the closet door. This also brings about another

economic concept of specialization of labor. Specialization of labor is the oncept of focusing work effort on a particular product or a single task. Specialization not only helps with not having to train new employees because they already specialize in the task, but it also helps production move faster, Usually when the workers can’t fit the job description it would result in unemployment, but since there is the shortage in energy, the company has to take upon the costs of training new employees because they clearly need more monsters to do the scaring to increase their production.However, the movie never mentions where Monsters Inc.

ever gets enough money to train new employees, which could be made into a little bit of a controversy; usually when there is a recession, a business typically doesn’t have enough money to hire even if the workers that are applying for the job are qualified. If this is the case, the government would usually get involved during a period of unemployment and they would either help the business itself, cut rates (like taxes) or do something that they think would put the economy back on the right path.However, a monster government is never brought to our attention in the movie so they don’t have a government to come to their rescue in this situation; and since they are going through the shortage they clearly don’t have enough money to bring in new employees, so not only is there a shortage of energy, but they don’t have enough employees either. Even though there is a shortage of employees, the monsters that do work there are always competing with each other to

see who can scare the most and get the most energy out of their scares.As I said earlier, Sulley is the top “scarer” at Monsters Inc.

and there is competition between him and Randall, the second top “scarer” monster in the movie, to see who can get the most energy by scaring the most kids. Competition in the workplace is not an unusual thing; it is used by most companies to motivate the workers to get the most out of them. Not only does competition result in increased production and sales in the company, but competition always makes work more enjoyable for the workers.The competition in Monsters Inc.

is mostly within the company, whereas in most business the competition is between other rival businesses that are producing the same thing. Most companies operate using perfect competition, which is when a few companies are producing identical or similar products and compete only on price. Along with perfect competition, there can be competition between companies in quality, availability and even delivery dates, and most of this competition is done through advertising. However, Monsters Inc. s a monopoly, which is defined as a sole producer of a product for which there are no close substitutes. Monsters Inc.

is the only corporation that produces energy for the entire monster world, so they don’t have any other businesses to compete with; therefore there is competition just within the company, between the monsters. Competition between the monsters is one of the economic policies in the movie that is touched upon most; but the concept of supply and demand however, is the most important economic policy used in Monsters Inc.Supply and demand

is perhaps one of the most fundamental concepts of economics and it is the backbone for market economy. Demand refers to how much (quantity) of a product or service is desired by buyers; therefore the quantity demanded is the amount of a product people are willing to buy at a certain price. Supply on the other hand represents how much the market can offer; so therefore the quantity supplied refers to the amount of a certain good producers are willing to supply at a certain price.

Prices therefore, are a reflection of supply and demand. The economic goal is for the allocation of goods to be at its most efficient, which happens when supply and demand reach equilibrium; and the economy is said to be at equilibrium when the amount of goods being supplied is exactly the same as the amount of goods being produced. However, in the real market place equilibrium can only ever be reached in theory, so the prices of goods and services are constantly changing in relation to fluctuations in demand and supply.An example from the movie in which supply and demand was seen is in the beginning of the movie the demanded amount of “screams” outweighed the amount of “screams” they actually had, or their supply, which then caused their shortage in “screams;” and because of their shortage in “screams” they had a shortage in energy. Because of this, Mr.

Waternoose, the head of Monsters Inc. , secretly invests in new technology to help with their production, which theoretically causes an increase in the amount of “screams” they have, which would then help bring Monsters Inc. ack to equilibrium and they

would then have an adequate amount of “screams. ” However, in Mr. Waternoose doing this, he is taking a risk because he gets Randall involved; he invents the scream extractor which holds children down and then sucks their screams out of them with a terrifying object.

However, if Mr. Waternoose and Randall got caught by the Child Detection Agency (CDA) they would be in a lot of trouble because doing this is considered breaking the law.However, throughout Sulley’s and Mike’s journey during the movie, they found out that a child’s laughter is ten times more powerful than their screams. Thankfully, getting their laughter instead of their screams doesn’t require any new machinery and all they have to do is change the technique they have for getting their energy; and it ends up helping the company out tremendously. They can now hire comedians instead of “scarers” which is in their favor because people generally know how to make children laugh, therefore the workers don’t need to be particularly skilled and don’t need as much training.Since they had the shortage in energy, the fact that they can now hire more easily helps increase production, which then in turns makes them able to supply the amount of energy demanded by the monster world.

Changing their production to laughter not only brought the monster economy back to equilibrium, but it made it easier for the economy to maintain the supply in the growing demand for the energy. Just like most businesses, Monsters Inc. encounters many economic problems throughout the movie.In the real world, corporations always have to deal with these economic concepts such as making decisions using the cost

and benefit concepts, and they have to make sure everything is on track using the concept of supply and demand, and competition between employees and other businesses can help them in making those decisions. Even though Monsters Inc. had to struggle with the energy shortage and had to deal with these problems, finally at the end of the movie when they start using laughter as their source of energy, you can assume that Monsters Inc.

s operating at full employment again, and the monster economy is finally back at equilibrium. Disney is known for always having happy endings to their movies, so theoretically when Monsters Inc. is at equilibrium and full employment, economically it is truly a happily ever after. References -Macroeconomics; A Contemporary Introduction. William McEachern (my macro text book) -Rolling Power Blackouts Darken California. Rachel Konrad.

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