For the most part, these topics are listed in the order in which they appear in the movie. A topic that reoccurs will be listed only once.

  1. The role of advertising in influencing product demand. The movie begins with the preview of an advertising campaign for a new kid's cereal, Veggie-Os. The movie ends with an advertising campaign for a different kid's cereal, Cotton Candy Puffs. The movie also shows the extent to which consumer demand cannot be changed by advertising. Veggie-Os fails market tests, causing the protagonists, Charlie and Phil, to lose their jobs and eventually open a daycare business.

  2.. Opportunity costs: The movie is loaded with illustrations. For example: We are told that Charlie's wife, Kim, stayed home with the son, Ben, as soon as she finished her law degree?  What opportunity costs did she incur? Opportunity costs are the obvious reason for Charlie, rather than Kim, staying home with Ben after Charlie loses his job. At the end of the movie the issue is seen again when Phil and Charlie are offered new jobs with their old firm, and Daddy Daycare is closed. The opportunity cost of continuing to run Daddy Daycare is too high with their new positions and higher salaries. The movie is full of examples of people facing choices and weighing the tradeoffs.

  3. Product differentiation:  Several types of daycare are shown in the film.

  4. Profit causes firm entry Charlie gets the idea to run a daycare business when a mother remarks to him that anyone who opened a decent day care would "make a killing."

  5. Ease of entry What does it take for the men to enter the daycare business? The start-up costs initially shown are toys, a swing set, flyers to handout, a couple of mornings and afternoons to handout flyers, and a license.

  6. Profit level/Cost structure: Chapman Academy is concerned over losing four children to Daddy Daycare. When an additional two children leave Chapman Academy for Daddy Daycare, the owner, Miss Harridan, attempts to put Daddy Daycare out of business. Miss Harridan  formally complains that Daddy Daycare does not meet the city standards for a daycare operation. Each time Chapman Academy loses additional children, the retaliation against Daddy Daycare becomes more persistent.

  7. Shut down point  When does the expensive, exclusive academy start to really feel the pinch from losing children to Daddy Daycare? Later in the movie, Miss Harridan says, "I should have crushed them in the beginning while they were weak."

  8. Government regulation.  After Miss Harridan's complaint, the men must make changes to the house to meet city daycare safety regulations. Why does the city regulate daycare? Is there a market failure that needed to be addressed?  What is the cost imposed on the firm by government regulation? Is it substantial?

  9. Marginal costs What is the marginal cost of the 11th child?  Why would a firm incur such a high marginal cost for one unit of output? Here Charlie and Phil are forced into the decision without time to think through the rationale. Do you think they would they have taken the 11th child if they had known the marginal cost? What is the marginal cost of children 13-15? Here Charlie and Phil have time to consider the marginal cost. What do they decide to do initially?  What do they decide to do after considering the matter? What influenced that decision?

  10. Competition/Market definition/Product Substitutability: Miss Harridan claims she is not afraid of Daddy Daycare because they are not "in the same league." To what extent are the firms competitors? To what extent are they not competitors? Could the firms be competitors in the minds of some consumers but not in the minds of other consumers? The answer hinges on the extent to which the firms offer products that are substitutes.

An aside: Product substitutability is an important issue, especially with regard to antitrust regulation. Firms accused of monopolizing an industry want to show that the product definition is broad and that there are many substitutes and therefore competition. The prosecution wants to prove a narrow product definition to show few product substitutes and therefore monopolization. Also, this might be a time to discuss the geographical components of a market. How far would a parent drive to have decent daycare for their child?

  11. How do firms learn about and meet consumer desires/demands?  This is a cute part of the movie when Charlie and Phil hold a "focus group" with the kids. It also changes the way that they run Daddy Daycare.

  12. The Long run-I think that at this point in the movie, you might be able to discuss the long-run effects of Daddy Daycare entering the market.

  13. Non-pecuniary wages Ben asks his father about his old job. Notice that Charlie first talks about non-pecuniary wages such as his nice office and the prestige of the job. This concept was shown earlier when Marvin takes the job with Daddy Daycare to become acquainted with one of the kid's mothers.  This concept comes up again when Marvin is offered a chance to return to the old firm with higher wages. He refuses because Daddy Daycare was "the first place where I felt I belonged." Non-pecuniary wages can be as important or more important than pecuniary wages. Studies have shown that teachers are more likely to leave the teaching profession over job frustration and working conditions rather than low wages.

  14. Price discrimination. Miss Harridan offers a tuition discount to clients of Daddy Daycare. What incentive does she have to do this? What does her offer tell us about her costs? What market conditions make this feasible?  Can this price discrimination be sustained in the long run?

  15. At the point in the movie where Miss Harridan decides to price discriminate she also now states, "I can't compete with fun?" Is this true?

  16. Trade-offs This concept has been mentioned before but it is important to note that even the young son, Ben, understands trade-offs. When Charlie returns to work, Ben offers to give up his toys. "If I don't have any toys then we won't need money, and you can stay home with me." He would rather have his dad than toys.

  17. Utility Function How does Charlie's utility function change during the course of the movie? In one of the last scenes, Charlie is in an advertising meeting and is asked, "What is the core value?" "What is the most important thing?" The question is concerning the new product "Cotton Candy Puffs." His answer: "My son is the most important thing"-- and so he quits his job. Now, the opportunity cost of quitting his job and reopening Daddy Daycare is much higher than the first time around. Not only does he have a job and a job with a much higher salary, but also his non-pecuniary benefits are higher as he has more power and prestige at work. He quits willing because he values Daddy Daycare more than what he is giving up. In the terms of economists, he has a different utility function than he had at the beginning of the movie. At what point in the movie do we see his utility function start to change? When he is discussing the children with his wife one night and she says, "I haven't seen you this excited about something in a long time."

The movie ends with Charlie in the reopened Daddy Daycare and the words "I say, this wasn't a bad trade-off."