21 Aug 1. Read and analyze the case study critically an
1. Read and analyze the case study critically and carefully! Revise the different behavioral biases/fallacies and the behavioral factors we learned about that could influence one’s decision to change the bulbs. Think about how they could be connected to the case! Know what the biases mean and be able to recognize their presence! 2. Assume that the data that the currently used CFL bulbs last exactly 4 more years for the Whelan family! Assume that the first energy costs will emerge in a year and that they remain constant in nominal terms! Consider that the inflation ratio will be 2% in each upcoming year! Should the Whelan family switch to the LED bulbs now based on the financial implications solely? Justify your decisions with appropriate capital budgeting methods! 3. Think about the trade-off between one’s own optimum and the social optimum! How would subsidizing the production/consumption or tax exemption of environmentally friendly goods make a difference in terms of prices and the supply and demand (graphs)?
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