Which of the following statements accurately describe the implications of externality graphs in economics? Select all that apply.

Externality graphs in economics help us understand how the actions of individuals or companies can affect others who are not directly involved in an economic transaction. For example, when a factory pollutes the air, it creates a negative externality because nearby residents suffer from the pollution even though they are not part of the factory's operations. This situation can lead to a market failure, where the true costs of production are not reflected in the prices of goods. By analyzing these graphs, we can see the difference between private costs and social costs, which helps policymakers decide how to address the issue. Understanding these implications is crucial for finding solutions that can reduce negative effects on society while promoting economic activity.