Supersubs and Hotwich are the only two sandwich shops in town. They have differentiated their products so that Supersubs Supersubs sells cold sub sandwiches and Hotwich sells hot sandwiches. At any given time, however, Supersubs could Sell cold only Expand selection expand its selection by purchasing a toaster and Hotwich could also easily start offering cold sandwiches. Refer to the game for the expected payoffs of their possible choices. A $12 $18 Sell hot What is the unique equilibrium outcome for a one- only $10 $2 time game? Hotwich $2 D $5 OD Expand selection O A $19 $6 O B

Explain why Von Hayek believes the Dependence Effect is not a bad thing.

Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p=140-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good. idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $20, which is the marginal cost his round imposes on the Club. Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes that Susan's inverse demand curve is p=120-2q. The manager has a policy of offering each member of a married couple the same two-part prices, so he offers them both a new deal. What two-part pricing deal maximizes the club's profit? Will this new pricing have a higher or lower access fee than in Joe's original…