2.  http://www.youtube.com/watch?v=- 1DNjJd2YfA&feature=related http://www.youtube.com/watch?v=- 1DNjJd2YfA&feature=related  From the video; 1. How is the pollution caused? 2. Who benefits from the pollution? 3. Who is affected by the pollution?  Do getting started P92

3.  http://www.youtube.com/watch?v=ahHSih4wAGI http://www.youtube.com/watch?v=ahHSih4wAGI  When things are produced a firm has private costs, i.e. costs of production, but these costs don’t include any external cost or negative externality, e.g. they don’t need to pay for the pollution caused by the production  So, Social cost (of production to all of society) = private costs + negative externality  Social costs > private costs

4.  When production of a good has positive externalities, e.g. new shopping centre removes dangerous old factory, the private cost don’t reflect the full benefit to society  So, Social benefit = private benefit + positive externality  Social benefit > private benefit

5.  Externalities can be positive or negative and come from either production or consumption  Categorise the following into a table like below; drinking alcohol, research & development, factory pollution, training given by employer, late night party, traffic congestion, job creation, wearing a face mask, depletion of ozone layer, new technology, using up non-renewable resources, site development, immunization EXTERNALITIES positivenegative productionconsumptionproductionconsumption

6.  Do Q1  Brainstorm: What can governments do to deal with externalities?

7.  taxation; e.g. carbon tax; polluting factories pay for their emissions  http://www.youtube.com/watch?v=weVU0-fEvjc Australian carbon tax http://www.youtube.com/watch?v=weVU0-fEvjc  subsidies; subsidise those firms producing G&S with positive externalities e.g. hybrid cars, or those firms investing in green production technology, education  fines; e.g. fines for dumping rubbish  government regulation; e.g. UK Environment Act set up to monitor & control pollution  other measures; e.g. London Congestion charge, Kyoto treaty

8.  Why do you think rail companies are often subsidised?  *Do exam practice  H/W; research the Kyoto Treaty

9.  What does externality mean?  What is the difference between private & social costs?  What is the difference between private & social benefits?  Give some examples; 1. Negative production externalities 2. Positive consumption externalities