Question: 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

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 Jobs 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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