Seekh Logo

AI-powered learning platform providing comprehensive practice questions, detailed explanations, and interactive study tools across multiple subjects.

Explore Subjects

Sciences
  • Astronomy
  • Biology
  • Chemistry
  • Physics
Humanities
  • Psychology
  • History
  • Philosophy

Learning Tools

  • Study Library
  • Practice Quizzes
  • Flashcards
  • Study Summaries
  • Q&A Bank
  • PDF to Quiz Converter
  • Video Summarizer
  • Smart Flashcards

Support

  • Help Center
  • Contact Us
  • Privacy Policy
  • Terms of Service
  • Pricing

© 2025 Seekh Education. All rights reserved.

Seekh Logo
HomeHomework HelpeconomicsExternality Graphs

Externality Graphs

Externality graphs depict the relationship between marginal private costs and marginal social costs in markets affected by externalities, such as pollution from copper production. These graphs illustrate the negative impact of production on society, emphasizing the difference between private decisions and social welfare. Understanding these graphs is crucial for analyzing market efficiency and the role of government interventions, such as taxes, to correct market failures.

intermediate
2 hours
Economics
0 views this week
Study FlashcardsQuick Summary
0

Overview

Externality graphs are essential tools in economics that help visualize the effects of externalities on market outcomes. They illustrate how costs or benefits that affect third parties can lead to inefficiencies in the market, resulting in overproduction or underproduction of goods. Understanding th...

Quick Links

Study FlashcardsQuick SummaryPractice Questions

Key Terms

Externality
A cost or benefit incurred by a third party not involved in a transaction.

Example: Pollution from a factory affects nearby residents.

Positive Externality
A benefit received by a third party due to an economic transaction.

Example: Education increases societal knowledge.

Negative Externality
A cost imposed on a third party due to an economic transaction.

Example: Air pollution from cars affects public health.

Social Cost
The total cost to society, including both private and external costs.

Example: The social cost of pollution includes health care costs.

Market Failure
A situation where the allocation of goods and services is not efficient.

Example: When externalities lead to overproduction or underproduction.

Supply Curve
A graph showing the relationship between price and quantity supplied.

Example: As prices rise, suppliers are willing to produce more.

Related Topics

Public Goods
Goods that are non-excludable and non-rivalrous, leading to free-rider problems.
intermediate
Market Structures
Different organizational forms of markets, such as perfect competition and monopoly.
intermediate
Cost-Benefit Analysis
A method to evaluate the total expected costs versus benefits of a project or decision.
advanced

Key Concepts

positive externalitynegative externalitysocial costmarket failure