1. Where is New York city?

2. It's in the USA.
3. It's in USA.
(Which answer is right? Are both OK?)

4. What food can we eat from carts?
5. We can eat drinks, hotdogs and pretzels.
(Can we use 'eat' before 'drinks'?)

2 is correct; 3 isn't.

In 5, I'd use "get" or "buy" instead of "eat" (since we usually don't eat drinks!!!).