Problem 2 [5 points] Person A smokes, but his room mate B hates smoking. A and B have the following utility functions: U

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Problem 2 [5 points] Person A smokes, but his room mate B hates smoking. A and B have the following utility functions: U

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Problem 2 5 Points Person A Smokes But His Room Mate B Hates Smoking A And B Have The Following Utility Functions U 1
Problem 2 5 Points Person A Smokes But His Room Mate B Hates Smoking A And B Have The Following Utility Functions U 1 (27.59 KiB) Viewed 42 times
Problem 2 [5 points] Person A smokes, but his room mate B hates smoking. A and B have the following utility functions: UA 100+ 8c-0.1c²; UB=100-6c = where c is the number of cigarettes smoked by A. Also assume that cigarettes are available at zero cost. Determine: a. the socially optimal level of cigarette smoked by A; b. the number of cigarettes smoked by A when he is completely free to smoke; C. the optimal Pigouvian tax.
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