CONSUMER AND FIRM BEHAVIOUR

1) Imagine your laptop computer is broken and you want to buy a brand new one.
a) Search online and make a (random) list with ten laptop models. (0.5 marks)
b) What are the attributes of a laptop computer that are most important to you? Describe your utility
function
𝑢(𝑎, 𝑏, 𝑐, 𝑑, 𝑝)
where a, b, c, d are different attributes of the laptop and p is the price.
(1.5 marks)
c) Reduce the number of your options from ten to three alternatives using the elimination by aspects
heuristic. Describe your process. What are the three laptop models left in your choice set? (1 mark)
d) For the remaining choice set with three laptop models, show whether your preferences are
i. complete (1 mark)
ii. transitive (1 mark)
e) Describe (in a few sentences) how your actual choice process would look if you had to buy a new
laptop. Do you rely mainly on rational utility maximization or simple heuristics?
(1 mark)
2) Imagine you are the prime minister of Australia managing the Covid-19 vaccine rollout.
a. On the 19th of August, 2021, what was the share of the Australian population fully
vaccinated against COVID-19?
Use data from ourworldindata.org to answer. (0.5 marks)
b. Choose an OECD country (apart from Australia). Imagine that Australians use the share
of the population fully vaccinated against COVID-19 in your chosen OECD country as
their reference point (𝑅𝑃). Suppose the difference between Australians’ reference point
(𝑅𝑃) and the share of the Australian population fully vaccinated against COVID-19 (AU)
determine Australians’ value 𝑣(𝑥), where (𝑥 = AU – RP).
Assume that the Australian public’s value function is
𝑣(𝑥) = 300𝑥 𝑓𝑜𝑟 𝑙𝑜𝑠𝑠𝑒𝑠 (𝑥 < 0)
𝑎𝑛𝑑
𝑣(𝑥) = 100𝑥 𝑓𝑜𝑟 𝑔𝑎𝑖𝑛𝑠 (𝑥 ≥ 0)

Sample Solution

d make decisions like having an abortion without parental approval. Surely, if juveniles are mature enough to decide on an abortion, they can be mature enough to commit murder. Furthermore, Scalia discusses the amici briefs from several states that describe “additional examples of murders committed by individuals under 18 that involve truly monstrous acts.” While juvenile executions are rare, Justices O’Connor and Scalia believe that it was a mistake to ban them completely. In their mind, not only are some adolescents capable of heinous acts, they should be punished accordingly.

The dissenters’ final gripe against the Court lies in the use of international law to help base its opinion. Justice Kennedy explains that save the United States and Somalia, the international community follows “Article 37 of the UN Convention on the Rights of the Child”, which contains an “express prohibition on capital punishment for crimes committed by juveniles under 18.” In addition, he notes that the United States is one of seven other countries that have executed juveniles since 1990, a list that contains Iran, Saudi Arabia and China. By lumping America along with some of the worst human rights offenders, Kennedy attempts to justify why banning the juvenile death penalty is necessary. While Justice O’Connor agrees with Kennedy on deference to international law, Justice Scalia believes this opinion is nothing short of judicial activism. While the use of international law can be helpful by seeing parallels with other countries, it should only be applied when a true “national consensus” occurs. In this particular situation, with the so-called consensus tenuous at best, judges should be careful before they look beyond our borders for legal comparisons. Scalia rightly points out that the Court seems to review international law only when it suits them. Unlike the United Kingdom (whose laws Kennedy also cites in his opinion), issues on separation of church and state, double jeopardy, and right to jury trial are “unique to American jurisprudence.” In other words, many freedoms taken for granted in the United States are different in other countries, and the Court should not simply pick and choose how America should “conform to the laws of the rest of the world.” Though the Court has not given itself the power to sign international treaties as Scalia suggests, it does go against Alexander Hamilton’s expectations that it should have “neither force nor will, but merely judgment.” By agreeing with international law without finding a direct consensus, the Court “proclaims itself the sole arbiter of our Nation’s moral standards.” This judicial activism, while well intentioned, “pre-empts the democratic debate through which genuine consensus might develop.” Justices Scalia and O’Connor rightly employed judicial restraint by insisting the Court find a clear consensus before making a decision that could alter an aspect of American society.

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