1. Explain the following with examples when indicated by * and diagram when indi-cated by **:(a) Price ceiling**(b) Price floor**(c) Tax incidence(d) Tax wedge**(e) Positive externality*(f) Negative externality*(g) Excludable good*(h) Rival good*(i) Public good*(j) Cartel* 2. Explain, with examples and diagrams, how a price ceiling causes a shortage and a price floor causes a surplus 3. Consider the market for cheeseburgers where the equilibrium quantity sold is Q at an equilibrium price P. To make people eat healthy and discourage the purchase of cheeseburgers, the government decides that henceforth all customers will pay a tax of $1 on every cheeseburger they purchase. Will the new equilibrium price be P+ 1? Why or why not? Explain with diagram. 4. Drug companies may enjoy enormous profits through sales of popular, life saving medicines. But, it is not a good idea to tax all that sales to earn revenue for the government because the innocent patient buying those drugs will end up getting affected. Explain this statement using diagrams. 5. How does (i) supply elasticity and (ii) demand elasticity impact taxation decisions.In both cases, give an example of a specific good and use those examples to answer this question with diagrams 6. . Some years ago, the New York Times reported that "the inability of OPEC to agree last week to cut production has sent the oil market into turmoil . . . [leading to] the lowest price for domestic crude oil since June 1990." a. Why were the members of OPEC trying to agree to cut production? b. Why do you suppose OPEC was unable to agree on cutting production? Why did the oil market go into "turmoil" as a result? c. The newspaper also noted OPEC's view "that producing nations outside the organization, like Norway and Britain, should do their share and cut production." What does the phrase "do their share" suggest about OPEC's desired relationship with Norway and Britain? 7. Pell grants are scholarships provided by the federal government to enable students from less privileged backgrounds to attend college. Why should a government do this? Explain with diagrams using concepts of externalities. 8. 2. Consider the market for fire extinguishers. a. Why might fire extinguishers exhibit positive externalities? b. Draw a graph of the market for fire extinguishers, labeling the demand curve, the social-value curve, the supply curve, and the social-cost curve. c. Indicate the market equilibrium level of output and the efficient level of output. Give an intuitive explanation for why these quantities differ. d. If the external benefit is $10 per extinguisher, describe a government policy that would yield the efficient outcome.