U = a(money - cigarette price - tax) + b(relative tax) + c(smoking) + d(health)

Small tax = 1
Large tax = 2
Health = 0 (if you smoke)
Health = 1 (if you don't smoke)
Smoking = 1
Not smoking = 0
Money = 5
Cigarette price = 1
Relative tax = 3 (if you pay no cigarette tax when smokers pay large cigarette t
ax)
Relative tax = 2 (if you pay no cigarette tax when smokers pay small cigarette t
ax)
Relative tax = 1 (if you pay small cigarette tax when non smokers pay no cigaret
te tax)
Relative tax = 0 (if you pay large cigarette tax when non smokers pay no cigaret
te tax)
Relative tax is the sense of relative gains/loss (positive/negative feeling) fro
m you having to pay a higher or lower tax compared to non smokers if you smoke a
nd smokers if you don't smoke and the amplitude of that difference.
a(5) = 5
a(3) = 3
a(2) = 2
b(0) = 0
b(1) = 1
b(2) = 3
b(3) = 5
c(0) = 0
c(1) = 6
d(0) = 0
d(1) = 1
U(Smoking|Small tax) = a(5-1-1) + b(1) + c(1) + d(0) = U(Smoking|Small tax) = a(
3) + b(1) + c(1) + d(0) = 3 + 1 + 6 + 0 = 10
U(Not smoking|Small tax) = a(5) + b(2) + c(0) + d(1) = 5 + 3 + 0 + 1 = 9
U(Smoking|Large tax) = a(5-1-2) + b(0) + c(1) + d(0) = U(Smoking|Large tax) = a(
2) + b(0) + c(1) + d(0) = 2 + 0 + 6 + 0 = 8
U(Not smoking|Large tax) = a(5) + b(3) + c(0) + d(1) = 5 + 5 + 0 + 1 = 11