Have you ever considered if your purchases have effects on others? There may be costs or benefits you're not considering!

Concept #1: Negative Externality and Positive Externality

Concept #2: Externalities on the Graph

Practice: Which of the following is an example of a positive externality?

Practice: If the production of a good causes a negative externality, then the social-cost curve will lie ________________ the supply curve, and the socially optimal quantity is _________________ than the equilibrium quantity.

Practice: Which of the following is true about externalities?