Joe is a smoker. He has a utility function for cigarettes smoked indoors (qโ‚) and a composite good (92) given by U(q1.92) - 10q10.1 + 92. Joe's income is $1,000 and faces prices pโ‚-2 and p21. The government is planning to ban indoor smoking. How much money would we have to give Joe to compensate him for this ban?

Q&A Education