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)