Person A smokes, but his room mate B hates smoking. A and B have the following utility functions: UA = 100 + 8c - 0.1c²;
Posted: Sun Jun 05, 2022 4:53 pm
- Person A Smokes But His Room Mate B Hates Smoking A And B Have The Following Utility Functions Ua 100 8c 0 1c 1 (29.3 KiB) Viewed 45 times
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.