Lesson 2: Externalities and Government Intervention
Duration of Days: 5
Lesson Objective
Students will analyze positive and negative externalities, spillover costs and benefits, socially optimal outcomes, and possible government responses.
How can one person’s choice affect others outside the transaction? Why do markets overproduce or underproduce some goods? How can government respond?
D2.Eco.1.9-12
D2.Eco.7.9-12
D2.Eco.8.9-12
CCSS.ELA-LITERACY.RH.11-12.7
CCSS.ELA-LITERACY.WHST.11-12.1
Students examine externalities through examples, models, graphs, and policy options such as taxes, subsidies, regulation, or permits. DOK Level 3
Graph templates, policy comparison charts, example banks, discussion stems, step-by-step modeling
Externality graphing activity and policy questions