Person A Smokes But His Room Mate B Hates Smoking A And B Have The Following Utility Functions Ua 100 8c 0 1c U 1 (98.52 KiB) Viewed 43 times
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Person A smokes, but his room mate B hates smoking. A and B have the following utility functions: UA= 100+8c-0.1c²; U = 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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