1. Explain how total surplus and welfare changes in the presence of a tax compared to when there is no tax.

2, Suppose a city with a population of 100 people is suffering from the free rider problem, and that each person in that city has a willingness to pay of $8 for this particular good. Also, the cost of providing this good is $800. Explain how the free rider problem can be solved in this case. Be specific.

3. Explain why a firm would not want to increase production if their marginal revenue was less than their marginal cost.

4. Explain why a firm's demand curve in a perfectly competitive market is perfectly elastic.