Tuesday, March 3, 2009

Subway Five Dollar Footlong Deal

I sat down trying to think of an example of economics in my everyday life, then my stomach started to rumble and I tried to remember what the last thing I ate was. I remembered I had a Subway footlong sandwich for lunch. It was one of the 5 dollar footlong sandwich deals. Then it dawned on me. I remembered when I went to Subway there was a huge line of people all getting 5 dollar footlongs. I started to wonder why it was so popular then I remembered something from 501. I remembered the whole consumer surplus concept. I realized that the 5 dollar footlong deal gave incredible consumer surplus to the consumer. I remember going to Subway before this deal and getting a footlong for about 7 bucks and sometimes more depending on what it is. So when I go Subway and want a footlong I am usually willing to pay 7 bucks for it, however now that the sandwiches are only 5 dollars I get a consumer surplus of 2 bucks. It may not seem like a lot but for something so little for me to get 2 dollars in consumer surplus I think its a great deal. I also thought of something else involving Subway. I remember once when I went to Subway and really wasn't that hungry so all I wanted to get was 6 inch sandwich, then I looked up to see the price and I saw that it was 4.50 for the sandwich, then I saw that the sandwich was one of the five dollar footlongs. I thought why would I get a 6 inch when for only 50 cents more I can get the equivalent of two six inch sandwiches, it made no sense economically not to get the footlong even though I wasn't hungry enough to eat the whole thing. So it turns out that I got a great deal out of the whole thing, I ended up eating only half of the sandwich but I saved the other half and had it for lunch the next day, so by getting a footlong instead of a 6 inch I was able to double the satisfaction or utility I got out of the purchase for only 50 cents.

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