Ishita is deciding to go on a holiday and has narrowed her choice down to three destinations: Bali (Indonesia), Rottnest Island (WA) and Broome (WA). She chooses between these locations based on her preferences for quality of beaches and temperature (the warmer the temperature the better). She knows that Bali is the hottest, but has the worst beaches, Rottnest is the coldest, but its beaches are better than both Broome and Bali.

(A) Using characteristics analysis, illustrate and explanation the situation where Ishita chooses to travel to Broome. [2 marks]

(B) Suppose that the value of the Australian Dollar appreciates, causing the price of a holiday to Bali to drop significantly, show and explain the situation where Bali becomes the preferred destination for Ishita. [1 mark]

(C) Given the prices as in part B, indicate how much the price of a holiday to Broome would need to change so that Ishita would be indifferent from travelling to Bali or Broome. [2 marks]

(D) Now suppose Ishita got gifted a travel voucher (non-transferable and cannot be exchanged for cash) which she can use only within Western Australia (WA). Prices are as in part C. Indicate and explain using characteristic analysis where should Ishita go for her holiday. [2 marks