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Job Is a Smoker

question 33

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Job is a smoker.He has a utility function for cigarettes smoked in bars (q1)and a composite good (q2)given by
U(q1,q2)= 10q1.5 + q2
Job's income is $100 and faces prices p1 = 5 and p2 = 1.The government is planning to ban smoking in bars.Compute the compensating variation.


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