Author Question: Return to the market for cigarettes from the previous question. What per-unit tax could the ... (Read 66 times)

Beheh · **on:** Jul 1, 2018

Return to the market for cigarettes from the previous question. What per-unit tax could the government levy to eliminate the deadweight loss from the behavioral bias?
a. 0
b. 1
c. 50
d. 100

Question 2

Return to the case of Jan, the hyperbolic discounter from the previous question. Suppose she can sign a contract that requires her to give up money equivalent to a loss of X utils if she does not undertake the action. Assume she does not behave consistent with her plans without this contract. How high would the contractual value of X have to be to prevent her inconsistency?
a. C B/2.
b. B.
c. C.
d. B + C.