Question: Externality & Public Goods (a) Explain, with an example, what is a public good (defination and example) (b) Explain, with an example each, positive &

Externality & Public Goods

(a) Explain, with an example, what is a public good (defination and example)

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

(d) CCNY decides to stop the sale of pizzas and substitute them with salads in all dining areas on campus.

i. Does this move have any externalities? Explain.

ii. Draw a diagram to show the demand, supply, social cost, and social value curve for salads in CCNY dining areas. Also indicate the market equilibrium and social socially optimal quantity.

iii. How should the government react to this move by CCNY? Punish CCNY or encourage CCNY?

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