AP Microeconomics

8.1 Externality Current Event Assignment

Externalities are not just a theoretical topic that economists refer to for fun. They happen every day
around you. In this assignment you will find a news article written within the past year that discusses the
ramifications of either a positive or negative externality. You will submit the following:

1. A link to a news article that discusses the ramifications of either a positive or negative
externality.
2. A paragraph summary of the article.
3. An explanation of the externality shown in the article.

Grading: This assignment will be graded out of 8 points. 1 point for identifying the article, 3 points for
the summary, and 4 points for the explanation of the externality.

Complete the assignment by filling in each of the required elements below.

Title of and Link to article: https://edition.cnn.com/2020/02/12/health/premature-mortality-cross-state-

air-pollution-study/index.html
Air pollution can cross state lines, and with deadly consequences, study says

Article Summary: The article starts off by revisiting the fact that pollution can harm health. Then it points
to a new study that demonstrates that pollution can cross state borderlines, almost creating a state
“trade” network of pollution of importers and exporters. The cross-state pollution leads to deaths from
pollution that was created in other states.

Explanation of externality in article:

There are multiple externalities (negative) shown here. The first is that there are deaths from pollution
that are not counted as costs in production, meaning that the equilibrium quantity produced is higher
than the social equilibrium quantity because social costs are not counted. The second one is that
pollution cross state boundaries, meaning that even for states that have regulations, the harm in other
states is not counted.