1129-Public Economics-2425_S2

Note: there is a typo in the solution topics of III a). It should be: U_H(CE_H) = E(U_H) <=> CE_H = 81; RP_H = E(X_H) – CE_H = 84 - 81 = 3; U_U(CE_U) = E(U_U) <=> CE_U = 64; RP_U = E(X_U) – CE_U = 68 - 64 = 4; WTP_H = AFP_H + RP_H = 19; WTP_U = AFP_U + RP_U = 36