Negative externalities of production

1. Negative externalities of production Water Pollution Presented By Duncan Baxter

2. Examples of water pollution

3. Click movie to play

4. Negative externality of production MC/ MB SMC PMC DWL (dead weight loss) PS P fm PMB = SMB Output QS Q fm

5. Negative externality of production because: Clean up cost from the emissions of waste products into water ways. Sickness from swimming in polluted river and eating fish from river. Market failure because: If we assume that the chemical producer is aiming to maximise profits ,then they only take into account the private costs and private benefits from their supply of chemicals so they will produce at the output level QFM. However, the socially efficient level of production after considering the spill over costs on third parties is QS where SMB = SMC. Causing a deadweight loss (of the red area in the previous graph) and so resulting in market failure.