Different People, Different Values (1977)

[music] The people who live on Market Street, you're going to see what they [music] do. The people who live on Market Street and what they're taking you through is [music] economics a treat. So take your seat. Here comes Market Street. [music] Here comes [music] Market Street. Here comes Market Street. >> Afternoon, Mr. Spencer. Going out of town again. >> Yeah, another sales trip. Got to hustle. So, fill her up. I'm late and I'm nervous. You know, late and nervous and late. Anything you say, Mr. Spencer. >> [music] [music] >> Thanks, Mr. Spencer. You come back here. >> Oh, hi. I'm Lester Man. And I own this station. Oh, that's my nephew Steve over there. He works for me when it doesn't interfere with the social life, you know. That's my brother-in-law Julian. Some go-getter Julian is. Oh, I live right around the corner on Market Street and lots of my neighbors buy their gasoline from me. >> Hi there. >> Hi, Diane. What do you know? >> Oh, just about everything. Say, Lester, I know this. Oh, I don't have time to chitchat. And listen, don't bother to >> Okay, I'll take care of everything. >> Hi, Mrs. Oonessy. How's the family? >> Fine, fine. Uh, five bucks a regular >> right away. >> Michael's fine. He loves when I left. Lamb's fine. >> People come to me for their gasoline because we give them good service at a competitive price. >> Fill it, Steve. And, you know, fix her up just like last week >> again. You want the bumpers dusted? Again, I have all kinds of customers that use different amounts of gasoline. The amount they demand is affected by the kind of work they do. Uh the size of their family or how wealthy they are. >> Fill her up. Another 20 gallons, please. Or whether they young. One gallon or old. I'll take a dollar's worth of regular. That should get me to my mother's house. >> I got a lot of deliveries today. Fill her up. Fill this tank, too. It's warm dry. Once a month, >> once a day. >> All customers demand different amounts of gasoline for different uses. And each of them places different values on his own use of gasoline. But to each person, some uses of gasoline are more valuable than others. >> Going somewhere, Lamb? >> Just cruising. Miss Jameson. Cruising. Using gasoline for that. Why don't you do something useful with it like go shopping or travel to work? You know, work. >> Cruising's valuable. It's worth more than the cost of gasoline to me anyway. Besides, I do drive to work and I do drive to school. But cruising? >> Oh, really? L. >> Same. Miss Jameson. When I was cruising last week about 50 mi away, didn't I see you playing golf with your husband? >> Well, yeah. 50 miles. Now that's about 5 gallons of gasoline to hit some little white ball with a stick into a little cup when you could have done the same thing right here in town. Now that's valuable. >> Worth every bit. Edward got a par. >> Whatever turns you want. However people value the things that they use gasoline for. To each of them those uses are worth it. >> Cruising golf. >> Cruising. Of course, if someone's wealth changes or the size of a customer's family changes, that may change how much gasoline he demands and how he uses it. But the effect of those changes on what people demand must not be confused with the effect that comes from a change in price. >> Wait a second. Is that the price of gasoline these days? Whatever the reason why, whenever the price of gasoline goes up or down, there's a predictable price effect on how much every customer demands. Like once when the oil supplied to the world was reduced. Our country got less. So what happened? I'll tell you what happened. Prices went up four times in just a few months. Doubled over what they had been. On the one hand, this is the fourth time prices have gone up this year. But on the other hand, I want gas. I need gas. And I'll buy gas. But on the other hand, I got to save somewhere. You know, give up something else. Maybe you, you old comfortable gas hog. And my customers noticed. Not all at once, maybe. But did they notice? I've been delivering all over the place, Julian. Couple of cases here, a couple of cases there. If the prices keep going up like this, I'll make it a 5k case minimum. And I'll only deliver every other day, too. That'll save me some fillerups. Hi, Dave. Huh? Oh, hi. Hi, Julia. All people are affected by price hikes in some way. Most customers couldn't imagine getting by with less gasoline, but because of higher prices, I began to sell less. Most people found ways to cut down the amount they were using anyway. Like when the price went up the first time. It >> would really be worth it to me, [music] Steve. She'll get a lot more miles to the gallon. >> Now, plugs, replace them. [music] >> Plugs. >> Plugs. Uh, points. Replace them. >> Points. >> Get me a cruise control and better motor oil. >> Hey, wait a minute. I thought you said you just wanted a tuneup. >> Listen. If the price of gasoline continues to go up, it'll pay me to rip out the automatic transmission. >> Uh, [music] automatic transmission. >> Transmission. Now, clean the carburetor. >> Clean the carburetor. >> Replace the hose. >> You know, a lot of these things work, okay? Like, uh, well, like your eagle here. >> It's my chicken. >> And then by the time the price of gas had doubled, the price effect was stronger. I've been coming in every week, every week, like clockwork. But at these prices, look, from now on, for me, at the most, every two weeks, >> try to live. >> What about me? You know, I have been trying to ignore these price changes, but I can't do it anymore. >> You see, we're planning this long trailer trip, but at this price, I'm going to have to think again and again. >> Hey, I am home. >> I'm in the kitchen, sweetheart. >> That's dinner. >> No, darling. Yours is with yogurt. >> Helen, honey, >> what is it, big fella? And our trailer trip keeps getting more expensive. >> You're not backing out, are you? Well, >> heavens no. >> But with a higher price of gasoline, it's going to cost about 10 bucks a day more. We'll uh we'll just figure out other ways to save. >> Think of what the $10 a day more would buy at the sports spa. There'd be golf and tennis, bowling. You love bowling. >> Yeah. Remember, we talked about it last year and we decided a trailer [music] trip would be cheaper. >> Yeah, but now the trailer trip's going to cost about $10 a day more. And for that $10, we'd have a lot better time at the spa. >> Oh, Michael. Oh, I'm so glad you thought of it. >> And when the price went up again, >> a new car. >> Isn't she a honey? >> Honey, that's a car. What do you mean? The dealer told me she'd get 30 miles to a gallon once I get her into shape. >> After the price stayed up there a while, its effect was to make people give up their less valuable uses of gasoline. They'd substitute. They'd watch more TV and drive to the movies less. Or they'd substitute by finding other ways of getting around. [music] Hey Steve, I traded my beep beep in for a vroom vroom. Saves a lot on gas. >> Well, if you really wanted to save, you'd trade in your vroom vroom for a putt putt. >> Miss miss, what do you mean that there's no 10:00 flight? I want to fly at 10:00. Substitutions mean slower and fewer flights on larger airplanes to reduce fuel costs. >> Couldn't you make it take off at 10:00? >> Or substitutions can be saving [music] some gas by adding more trailers onto trucks or forming car pools. [music] or planning shopping in advance so more things can get done with fewer trips. >> I'm sorry. >> Or the money I save, the weight I lose, [music] the weight, the exercise. Oh, the money. >> I don't know about this. >> See, that's the price effect. The higher the price, the less gasoline demanded. It's not that people are stingier or smarter or less wasteful when the price goes up. It's just that at the higher price, some uses of gas don't pay. They aren't worth it. And no one has to tell people which uses to give up. They decide for themselves. >> I like the big car. Will use it more and that's [music] that. >> Yes, but it eats more gas. >> But it's so much more comfortable for my clients. >> But it eats more gas. >> And the colors so terrific. >> But [music] it eats more gas. So, what does that tell you? I'll tell you. People respond to price changes. That's the price effect. So, at lower prices, they have more uses for gasoline. Uses that weren't worth it before. Just like a higher price makes people demand less gasoline, a lower price makes them want more. Terrific. These prices. Now, I can give more service, deliver a case at a time. Uh, fill her up. Uh yeah, and fill the spare tank, too. [laughter] >> Just one lemon. So, tomorrow if I want a head of lettuce or something, I'll drive over for a head of lettuce or something. Just bring it up. >> Maybe I should have gotten the lettuce. >> Well, if I need some, I'll just drive back. Why spend time planning ahead to save on a little gasoline? My time is valuable. >> Who needs a car poolool? [music] >> Go away. Go away. I like my driving in my car by myself. So, it's not that people are wasteful or use gasoline less efficiently when its price falls. It's just that they have more uses for gasoline that are worth it at the lower price. But there's a special kind of low price, one that is kept too low by law. That kind of low price, a controlled one, has an effect, too. If they put on those price controls, try to keep the price of gasoline below the going price, you should see what would happen at the lower price. People would want even more gasoline. We'd wind up with what's called a shortage, even though [music] there was just as much gasoline as ever. >> Julian, do you have to drink coffee? >> It's only my second cup. >> Never mind your second cup. We had a bunch of cars waiting for gas. Don't wipe the windshield with a dirty rag. It's memorial. >> This is the clean one. >> Come on. Let's get going. >> How long have you been waiting day at this pedicure? A pedicure. And [music] the gallbladder is due in surgery in 15 minutes. Look at this mess. You can afford to sit. Not me. Not my patients. I could have done the gallbladder already and a couple of appendecttomies. Besides, >> this is terrible. Everybody's going crazy for what they say. I'm next. No. No. I'm next. >> We order clothes on Sunday. We could sell everything anyway. And that way we could save on what we pay our part- timerrers. Hey, look fellas, calm down, will you? Do yourselves a favor. Don't sterilize the windshield. Just dab it a little. But keep pumping gas, please. Will you? >> I like price control. Keeping the prices low saves me money. Besides, I get a little fresh air. And it beats staying home playing Chinese checkers with my wife, Annie. >> Pleasure. When am I going to get out of here? in a couple of minutes. Please ask >> an appointment. >> I could pay triple for gas and still come out ahead if I didn't have all this waiting to do. >> Dr. Washington over there. His time with [music] his patients is so valuable. He wants the price of gasoline higher so you wouldn't have to wait. Not me. I'm retired. My time it's cheap. >> All right. Let's move this bucket of bulls out of here. >> Get out of here. >> Fill her up, Julian. >> I'm sorry. You're going to have to go to the end of the line. >> That's right. It's the back of the line. You got to >> What do you mean? Even if I take an oil change, maybe you reconsider. >> Oh, come on. That's not the end of the line. >> But they do it down the block. I mean, you know, you get an oil change and they fix you right up. >> Maybe some other time. >> Come on. That's not going to work. What about this? >> Lance, >> wipe the windshield. >> Lance, where'd you get this? Far out. I mean, it's incredible. It's so big. So luxurious. Power seats, power steering, power brakes. Power, power, power. >> Well, try not to touch it too much. I mean, your greasy hands might spoil my wax job. >> Wow. >> I need a Wow. Now, you promised my husband that you'd get his new car filled up right away. You don't want to lose $2 for sitting in line, do you? >> Prices fixed so low would cause a shortage. People would want more gasoline than there is and all the usual quality services, windshield, maps, long hours, and stuff. Forget it. I'd be too busy. And besides, the gas would sell anyway. >> How much longer do I have to wait around here? I can't keep my clients waiting, and I've got work to do for them. So fill it yourself, Lester. >> A price fixed too low doesn't really keep everyone's cost down either. The waiting costs all the customers something extra depending on the value of their time. To people whose time is very valuable, the cost of getting gasoline becomes a lot more than just that low price. So they wind up using gasoline in only their very valuable ways. My wife Ununice, she'll want to go to a movie tonight. Know what I'll say? I'll say, "Oh no, Ununice. We can't afford to use our gasoline that way. Waiting in line to get more will cost me too much." For people whose time has a low value, the cost of getting gasoline is only a little more than the control price. So, they want to get more gasoline to use. >> My wife Benny, she'll want to go to the Chinese checker club tonight and play Chinese checkers. And you know what I'll say? I'll say, "Sure, Annie. Anything you want. [music] We got all the gas we want. Doesn't cost me much to wait in line." You know what else I'll say? I'll say, "Maybe we'll take a drive in the moonlight, too." >> A, you're real sweet, Mr. Cardner. >> Keeping the money price down helps some people and hurts others. If the price is [music] allowed to rise to the competitive level, all those lines would not occur. Well, that's how it goes. You learn an awful lot about people's demands just by watching them here on Market Street. Customers use different amounts of gasoline for different reasons like age, family size, wealth, and the kind of work they do. If someone's wealth or family size changes, that will affect how much gasoline he demands and for what uses. Each person places different values on his own varied uses of gasoline. To each person, some uses of gasoline are more valuable and some are less. But whenever the price of gasoline goes up or down, there's certainly a price effect on how much every customer demands. The effect of a higher price is to make people use less gasoline. They give up lower valued uses. They make substitutions. substitute more of other things, behave in other ways. Not only that, the longer the price stays high, the greater the price effect. People make bigger, more important adjustments. The price effect works in reverse, too. If prices are lower, they demand more gasoline for lower valued uses that weren't worth it before. The longer the price of anything stays low, the more uses people find for it, and that's the price effect. But when prices are kept too low by law, there's another effect. That too low price makes people demand more gas than is available, and that causes a shortage. The quality of service deteriorates. And even though the money price of gasoline is held down, the actual cost rises. People act in more costly ways to get gasoline. Some get gasoline and drive as usual without paying a much higher cost. Others do pay a much higher cost and use what little they get for only their very valuable uses. It's the same for everything, not just gasoline. groceries, energy, clothing, movies, water, even education. Prices affect how much you demand of anything. The substitutions are different from person to person. But for everything, the higher the price, the less you demand. The lower the price, the more you demand. That's the price effect. You see what I mean? Everyone puts a value on things they want at a particular price. They hardly think twice, but it's a different matter. When [music] prices rise, the amount they demand is less than they planned. [music] The people who live [singing] on market. When cost is higher, they [music] compete. A lot of new ways to substitute the economics. Repeat what people [music] do [music] here on Market Street.