This is NPR. Hello and welcome to Planet Money Summer School. You're eight week fast

track to riches and power or at least an understanding of how those things work.

This is class number three, profit and cocaine. I'm Robert Smith every Wednesday till Labor

Day we are tagging along with you to the beach to the park to teach you the essential

principles of Econ 101. Oh and did we mention there is going to be a test. Pass a few simple

questions at the end of the course and we'll put your name on a Planet Money Diploma suitable

for framing, not suitable to use as an educational credential. In class one we talked about how

economists think about individual decisions, costs and benefits, opportunity cost, class two

sorted out those decisions into a market, complete with prices and supply and demand. And now here in

class three we're going to get down to the business of business. What makes a product sell?

What are the risks and rewards of being an entrepreneur and how do you keep competitors out?

Economists often like to look at the extreme cases of something in order to see the principles

that work underneath and that's what we're going to do in this class. The subject of today's lesson

and story was one of the most notorious and successful crack dealers in Los Angeles in the 1980s

in 1990s. My name is Ricky Ross. I'm known on the streets as Freeway Rick. But when I saw drugs

if they had told me that he was going to legalize it out of been mad because I knew that that was

going to drive the price down. We should know there's also a successful rapper and music executive

named Rick Ross. He took that name as an homage to Freeway Ricky Ross but the two of them have no

connection. Today in summer school we take a look at the economics of drug dealing and do a reality

check with an actual drug kingpin. And then at the end of the episode we'll bring in our economists

and residents Betsy Stevenson and Justin Wolffers who will show us how the lessons learned on the street

can be used to think about how all businesses work. This message comes from Western

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