Question 2. (5 Marks)

a) Explain why cigarette smoking is often described as a good with negativeexternalities. (1m)

b) Why might a tax on cigarettes induce the market for cigarettes to perform more efficiently? (2m)

c) How would you evaluate a proposal to ban cigarette smoking? Would a ban on smoking necessarily be economically efficient? (2m)

it would be of great help if graphs will be used