Problem 1 Historically, vaccinations have prevented the spread of certain diseases such as chicken pox or meningitis. What type of externality takes place with the consumption of such vaccines. Explain with words and a graph. Problem 2 For a tax on cigarettes, show (using a graph) the deadweight loss of taxation. Determine the areas of consumer surplus, producer surplus and government revenue. Is there a net gain or a net loss of surplus (well-being) to society with such tax?

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