Select a newspaper/magazine/Internet article published in 2019-present related to Topics 3 to
6. Alternatively, you can submit one simple data analysis related to Topic 3 (perfect
competition), Topic 4 (monopoly, oligopoly, and game theory), Topic 5 (asymmetric
information), Topic 7 (macroeconomic statistics), and Topic 10 (comparative advantage &
international trade). The source of the article/data must be provided in the references. Use
relevant economic concepts and theories of the textbook/lectures on the above topics to
analyse your selected article or the findings from your simple data analysis. Use the template
provided in this appendix to answer this question.
Question 2 (5 marks; word limit: 200)
Suppose that there are two people in Country A: Young and Old. Both Young and Old have
to individually decide if they are going to have vaccination or not. The benefit of vaccination
(H) is the same for both of them, which is positive. However, since Young is younger than Old,
the side effect of vaccination for Old (So) is more severe than that for Young (Sy). That is, So
is larger than Sy (i.e. So > Sy > 0). Accordingly, the net benefit of vaccination for Young is H
– Sy and that for Old is H – So. If either one of them is vaccinated, the other is immune and
has a benefit of H. If both of them are not vaccinated, they have a benefit of B that is less than
H – So.
(a) Based on the information provided, complete the payoff matrix for having vaccination below.
The first and the second figures inside a parenthesis indicate the net benefit to Old and
Young, respectively.
For example, If Old is vaccinated and Young is not, then the net benefit to Old is H–So, and
that to Young is H.
Young
Vaccinated Not Vaccinated
Old Vaccinated (H–So; H)
Not Vaccinated
(b) With reference to the payoff matrix in (a), does either player have a dominant strategy?
Briefly explain your answer.
(c) Suppose that the government of Country A provides a cash subsidy of s to people having
vaccination and So > s > Sy. Will this policy change your answer to (b)? What is the
equilibrium outcome? Briefly explain your answers.
State the number of words used at the end of your answer