Externalities are effects on "third parties due to economic activity, such as production and/or consumption of goods and services". They consist of external costs and external benefits.
Now watch the video below and answer the following questions:
Is the externality from the consumption or production of alcohol?
Is it a cost or a benefit?
List the various externalities.
Examples of external Costs
Examples of External Benefit
Now read the case study on The London Olympics and answer the questions