Uploaded November 2022 | Updated September 2026, 2 weeks ago

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Learn how both negative and positive externalities impact society with real-world examples of environmental issues, resource overuse, and solutions for reducing pollution, in this 4:40 minute long video lesson.

In economics, an externality is an indirect cost or benefit to an uninvolved third party that arises as an effect of someone else's activity. Negative externalities can pose a fundamental problem to society. The story of Tony, a fisherman, shows what can happen when negative externalities are not internalized.

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THANKS to our patrons (UPDATE 15/NOV/2022)
This video was made with the support of our Patrons: Andrea Basillio Rava, Angela, ArkiTechy, Artur, azad bel, Badrah, Cedric.Wang, David Markham, Delandric Webb, Denis Kraus, Digital INnov8ors, Dr. Matthias Müller-Mellin, Duane Bemister, Esther Chiang, Eva Marie Koblin, Fatenah G Issa, Floris Devreese, Frari63, Gatsby Dkdc, Ginger, Harmoniac Design, ICH KANN DEUTSCH UND ES WAR EINFACH!, Isabelle, Jana Heinze, Jannes Kroon, Jeffrey Cassianna, Joanne Doyle, Johan Klassen, John Burghardt, Jonathan Schwarz, Justin Keith, Karen Lewis, Kenneth Natvig, Khadijah Sellers, Leonel, Linus Linderoth, Liskaya, Marcel, María, Mathis Nu, Matthias Ruck, Mezes.Macko, Michael Brown, Mindozone, Natalie O’Brien, Nicki, Okan Elibol, Paul Hopkins, Peter Bishop, Petra, Raymond Fujioka, Robert Cook, Scott Gregory, scripz, Sebastian Huaytan Meder, Si, Stefan Gros, Stephen Clark, Stuart Bishop, Susan Schuster, Tetiana Gerasymova, Tristan Scifo, Victor Paweletz, Yvonne Clapham and all the others.Thank you! To join them visit patreon.com/sprouts

COLLABORATORS
Script: Jonas Koblin and Jonas Jacquet
Artist: Pascal Gaggelli
Voice: Mithril
Coloring: Nalin
Editing: Peera Lertsukittipongsa
Sound Design: Miguel Ojeda
Production: Selina Bador

SOUNDTRACKS
Toys Are Alive - Studio Le Bus

DIG DEEPER with these top videos, games, and resources:

Listen to this EconTalk episode with Mike Mungers on subsidies and externalities.
econtalk.org/munger-on-subsidies-and-externalities

Read this overview on externalities by Brian Caplan.
econlib.org/library/Enc/Externalities.html

Watch Sprouts' video on tragedy of the commons.
sproutsschools.com/tragedy-of-the-commons

Learn more about supply and demand
sproutsschools.com/supply-and-demand-the-force-behind-your-cup-of-coffee

SOURCES
en.wikipedia.org/wiki/Externality
imf.org/external/pubs/ft/fandd/2010/12/basics.htm#:~:text=Externalities
investopedia.com/ask/answers/051515/how-do-externalities-affect-equilibrium-and-create-market-failure.asp

CLASSROOM EXERCISE
To view suggested classroom activities on this topic, check out our website at sproutsschools.com

CHAPTER
00:00 Introduction
00:44 Environmental impact
01:07 Social behavior impact
01:32 Solution
2:00 Distortion of supply and demand
02:35 Tragedy of the commons
03:01 To prevent negative externalities
03:18 Summary
03:41 What do you think?
04:13 Patrons' credits
04:22 Ending

#economics #sproutslearning #externalities #socialcost