1. What did you intend to do or say? What was the unintended
6/5/14
“Externalities”
Think of a time when you did something or had a conversation that had an unintended consequence:
What did you intend to do
or say?
What was the unintended
consequence of your action?

2. What did you intend to do? Unintended consequences
“Externalities”
What did you intend to do? Unintended consequences

3. 6/5/14
Econ. Agenda
What are economic externalities? (class notes)
Externality activity (in partners) HW
HW: Obama climate plan article
Read & directed notes
Answer questions relating to externalities at the end

4. 6/5/14 Class notes – economic externalities
externality (n.)
Unintended side effect or consequence of economic activity…
that affects other parties…
without being reflected in the cost of the goods or services involved.

5. 6/5/14 Class notes – economic externalities
Positive externality example:
Beekeeper raises bees to produce honey, which she sells at the farmer’s market.
Costs of production for beekeeper:
Price of honey at farmer’s market:
EXTERNALITY (positive):
Beekeeper’s bees pollinate surrounding
flowers…

6. 6/5/14 Class notes – economic externalities
Negative externality example:
Farmer produces bananas in Peru so you can have them all year round.
Costs of production for bananas:
Price of bananas at grocery store:
EXTERNALITY (negative):
Burning jet fuel releases CO2 into the
atmosphere, causing increase in global warming…
thisorthat.com
foncho.fairtrade.org.uk

7. 6/5/14 Class notes – economic externalities
Externalities can occur at any of the 5 Stages of Production Process:
Extraction
Production
Distribution
Consumption
Disposal

8. Hershey’s chocolate bar
6/5/14
Externality activity
In pairs, discuss the production process for your good and determine the externalities that might occur at each stage.
Hershey’s chocolate bar
Apple i-phone
Camel cigarettes

9. 6/5/14 Class notes – economic externalities
externality (n.)
Unintended side effect or consequence of economic activity…
that affects other parties…
without being reflected in the cost of the goods or services involved.

10. Hershey’s chocolate bar Apple i-phone Camel cigarettes
Extraction:
Production:
Distribution:
Consumption:
Disposal:

11. Economic externalities discussion:
Who is “paying” for these economic externalities now?
Who should be paying for these economic externalities? How might this work?
HW: Obama climate plan article
Read & directed notes
Answer questions relating to externalities at the end