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Production and Consumption Externalities (Revision Presentation)

AS, A-Level
AQA, Edexcel, OCR, IB

Last updated 22 Mar 2021

This is a revision presentation on externalities from production and consumption

Production and Consumption Externalities

Externalities seem to be everywhere! Little wonder that you probably won't get through a micro exam paper without bringing externalities into your analysis and evaluative discussion!

There is a lot to cover so start your revision early on this topic! You will need to be able to illustrate external costs and external benefits using marginal analysis, and then distinguish between the market and social optimum positions. Showing the welfare loss or gain areas are required as you analyse the effects of externalities from both production and consumption.

One key evaluation point to remember – not all externalities are that important – but many are which is why this is a favoured topic for examiners.

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