7. (a) Explain, with an example, what is a public good

(b) Explain, with an example each, positive & negative externality

(c) Explain, in detail & with an example, what is meant by tragedy of the commons.

8. City College decides to stop the sale of pizzas and substitute them with salads in all dining areas on campus.

(a) Does this move have any externalities? Explain.

(b) Draw a diagram to show the demand, supply, social cost, and social value curves for salads in the college's dining areas. Also indicate the market equilibrium and socially optimal quantity.

(c) How should the government react to this move by City College? Punish or encourage? Please explain.

9. (a) Explain, with a diagram, what is a tax wedge.

(b) Explain, with an example, what is price ceiling.

(c) What are the upsides and downsides to a $15 minimum wage? Explain with a diagram.

10. Consider the market for cigarettes where the equilibrium quantity sold is Q at an equilibrium price P. To discourage smoking, the government decides that henceforth all cigarette manufacturers will pay a tax of $1 on every pack of cigarettes they sell. Draw and explain how this tax affects the cigarette market. Show all prices on the y-axis.