The Economics of

The Lorax!

As you watch the film, answer the following questions using all of the economics
knowledge and wisdom you have gained so far this year!

1. What type of economic system seems to be used in Thneedville?______________________________________

How do you know this?________________________________________________________________________

How do you know this?________________________________________________________________________

2. Is there an example of entrepreneurship early on in the film? __________________________________________

3. What kinds of infrastructure do you see so far? ______________________________________________________

4. How are the people of Thneedville using a market system to deal with poor air quality?
_________________________________________________________________________________________________

5. How is OHare taking advantage of negative externalities in order to make a profit?

_________________________________________________________________________________________________

6. How is OHares business plan an example of a market failure?

_________________________________________________________________________________________________

7. Ohare seems to have no competition from other air suppliers - why is this?
_________________________________________________________________________________________________

8. Who seems owns the trees?

_________________________________________________________________________________________________

9. Explain how the animals could be considered Free Riders in relation to the trees. ______________________

_________________________________________________________________________________________________

10. How does the Onceler justify his right to cut down the trees? __________________________________________

Is he right? ______________________________________________________________________________________

What element of Capitalism is he ignoring in this situation? ___________________________________________

11. Why does the Onceler call in his family? ____________________________________________________________

What factor of production is this an example of? _____________________________________________________

12. How could the Lorax and the Onceler work out a market solution to their disagreement about the trees?

_________________________________________________________________________________________________

_________________________________________________________________________________________________

13. Describe how government could intervene to resolve the dispute over Truffula Trees using the following
economic tools.
- A subsidy:
____________________________________________________________________________________________

- A tax or fine:
____________________________________________________________________________________________

- Promoting positive externalities:

____________________________________________________________________________________________

- Providing public goods:

____________________________________________________________________________________________

!
!

14. Create a PPC for Thneeds and Truffula Trees.

15. Label where the Oncelers current production is on the
curve.
16. Is this sustainable? Why or why not?
_______________________________________________________

_______________________________________________________

_______________________________________________________

17. What is the meaning or significance of the name The Onceler? ______________________________________

_________________________________________________________________________________________________

18. How is the Oncelers song critical of Capitalism/market systems? (Lyrics are on the last page)
_________________________________________________________________________________________________

_________________________________________________________________________________________________

!
!

19. Why doesnt the Onceler think hes bad? ____________________________________________________________

20. What negative externalities are felt by the animals ____________________________________________________

_________________________________________________________________________________________________

21. How is the collapse of the Thneed industry an example of market failure?
_________________________________________________________________________________________________

22. What would happen to OHares business if there were REAL trees everywhere?
_________________________________________________________________________________________________

23. Is it possible to make a circular flow model for the Thneed industry? Try it in the space below...

24. Does the model work? Why or why not? ___________________________________________________________

_________________________________________________________________________________________________

!
!
!
!
!

25. What are the positive externalities created by Truffula Trees? __________________________________________
26. What are the negative externalities of having Truffula Trees? __________________________________________
27. Are Truffula Trees a public good? __________________________________________________________________
28. Is air a public good? ______________________________________________________________________________
29. How could government intervention stop people like OHare?
_________________________________________________________________________________________________

30. Who seems to have all of the political power in Thneedville? ___________________________________________

How does that impact the economy of Thneedville? __________________________________________________

31. Since it was written by Dr. Seuss in the early 1970s, The Lorax has been interpreted many ways. Explain
whether you agree or disagree with the following interpretations:

- It is a critique of American consumerism and obsession with artificial, processed, manufactured goods.

- It is a critique of how market systems tend to emphasize profit more than responsibility

- It is a warning about the rising influence of big business in government and the negative externalities that
come with it.

!
How Bad Can I Be? Lyrics
How bad can I be? - Im just doing what comes naturally
How bad can I be? - Im just following my destiny
How bad can I be? - Im just doing what comes naturally
How bad can I be? - How bad can I possibly be?

Well there's a principle of nature (principle of nature)

That almost every creature knows
Called survival of the fittest (survival of the fittest)
And check it this is how it goes
The animal that eats has got to scratch and fight
And claw and bite and punch
And the animal that doesn't well the animal that doesn't
Winds up someone else's l-l-lunch (lunch lunch lunch lunch lunch)
I'm just sayin - How bad can I be?
I'm just doing what comes naturally - How bad can I be?
I'm just following my destiny - How bad can I be?
I'm just doing what comes naturally - How bad can I be?
How bad can I possibly be?

There's a principle in buisness (principle in buisness)

That everybody knows is sound
It says the people with the money (people with the money)
Make this ever loving world go 'round
So I'm biggering my company
I'm biggering my factory
I'm biggering my corporate sign
Everybody out there can take care of yours
And me? I'll take care of mine mine mine mine mine (shake that bottom line)

Let me hear you say smogedy smoke (smogedy smoke)

Schlopadee Scholp (Schlopadee Schlop)
Complain all you want it's never ever ever ever gonna stop

How bad can I be? - Im just building the economy

How bad can I be? - Just look at me petting this puppy
How bad can I be? - A portion of proceeds goes to charity
How bad can I be? - How bad can I possibly be?
Let's see

All the customers are buying

And the money is multiplying
And the PR people are lying
And the lawyers are denying
Who cares if a few trees are dying
This is all so gratifying