Question

2 Sales Tax with Limited Attention In class, we saw evidence that consumers are not fully responsive to "shrouded" prices, like shipping costs and sales taxes. In this problem we will work through a model of rational limited attention. Consider a consumer whose income is $100. Her utility function is given by: U(X, Y, c) = ln(X) + Y-ve. In(-) is the natural logarithm. The derivative of the natural logarithm is dln(X)/dX 1/X The price of both X and Y is 1 but X is taxed at 10%. c equals 0 if the consumer does not pay attention to the sales tax and 1 if the consumer does pay attention. Therefore, ve is the psychic cost of paying attention. The consumer's actual budget constraint is given by 100 -1.1x Y, but they perceive the price of X to be Px 1 + 0.1 c.

Answer 1

Summary of the case: The case deals with clinical and ethical issues. In this case, the doctors should have followed what was written on the living will as they both signed and not by what the husband says to do because ultimately she is in control of whether or not she wants to ide. According to legal rules, the doctors are required to follow what is signed and written on the will In case of a life and death situation, doctors should immediately consult her husband about her rights or any other life support needed for her The following are the legal/ethical issues specified from the case: 1. Patient is unable to provide her own informed consent for medical care. Informed consent means making a medical treatment choice and includes the choice of non treatment 2· The patient's Advance Directive is strong evidence and significant in determining what the patient would want for substituted judgment. Since the patient's husband (her legal surrogate) only made vague statements as to why he thought she would want continued care under these circumstances and the husband's perspective was contradicted by their adult children - it appears the situation requires further communication efforts, e.g., patient care conference, ethics consult. Clearly verify that the content of the patient's is consistent with a decision to forego further life-sustaining measures. Check, if possible, with those persons who were present when she prepared/signed the document to gather further information about the patient's intentions Check to make sure the clinical determination is well-documented in the patient's chart Affirm consensus among the medical team about: the clinical determinations; the appropriateness of withdrawing life support as in the patient's best interests; and that withdrawal is consistent with her Advance Directive