| Graphically externalities show up as entirely new curves. The standard supply and demand curves are private benefit and private cost. Positive externalities are depicted as a social benefit curve that is shifted up from the private benefit curve; negative externalities show up as a social cost curve that is shifted up from the private cost curve. The social benefit/cost curves are shifted up from the private benefit/cost curves indicating that the individual either does not enjoy all the benefits of consuming a good or does not bear all the costs of consuming a good. The difference between the private and social benefit/cost at each quantity is the external benefit/cost. |