While Jerry and Elaine are at a restaurant, a valet parking attendant with body odor leaves Jerry's car with a lingering smell. The external costs are large: the smell attaches itself to Jerry and Elaine, who have to resort to costly measures to cleanse themselves. Jerry attempts to recoup some of the damage by cleverly bargaining with the restaurant owner to cover the cost of cleaning the car. In the end, the cleaning is not enough, and Jerry leaves the car and keys in plain sight hoping it will be stolen, in which case the insurance company will bear the loss.

Jerry's car is broken and he takes it to a new mechanic. The new mechanic gives an estimate that Jerry believes is too high. George says, "Of course they're trying to screw you—that's what they do. It's because you don't know anything about what's going on under there!" George also says that Putty, Jerry's regular mechanic, wouldn't try to screw him. Reputation for honesty can overcome moral hazard problems.

Stringer Bell learns about product elasticity and then explains it to the gangsters he is in business with.

Harold, a tax auditor, visits Miss Pascal at her store to audit her because she paid only 78% of her taxes for the year. She gives him a hard time and states that she intentionally did not pay taxes for spending that she does not support. Miss Pascal mentions some ways that the government spends taxes.

Describes what taxes are and what they are used for. This music video also mentions the different types of taxes.