RECENT ASSIGNMENT

The setting:
Curtin University, along with a number of other universities and public bodies, has banned the sale of tobacco products and smoking on its campuses.
In the analyses below, when drawing your diagrams assume that students can choose among only two products on campus, namely tobacco and food. Assume each student has a weekly allowance of $100, all of which is spent on campus, the price of a unit of food is $1 and remains at $1 in the absence of a policy initiative, the price of a unit of tobacco is $1 in the absence of a policy initiative (see below). Please ignore all externalities when answering this assignment. When drawing diagrams, always include a discussion of what the diagram means, and of crucial elements of the diagram.

Your tasks:
a) Use an indifference curve-budget line analysis to depict the situations, prior to the ban on smoking, of a student who smoked on campus, and of a student who did not smoke. (2 marks)

b) Use an indifference curve-budget line analysis to depict the situations, after the ban on smoking, of a student who initially smoked on campus, and of a student who did not smoke. (3 marks)

c) Use you consumer theory to assess how much worse off, if at all, each student is after the ban. (3 marks)

d) Consider at least three (3) alternative policies that Curtin University could have implemented that might have achieved the same objective (reduce smoking levels). Evaluate these using your microeconomic theory. (e.g., public relations campaign about harmful effects of tobacco aimed at changing the shape of the ICs; increase price of tobacco; reduce the price of food). (6 marks)

e) Referencing. (1 mark)