Identify the externalities associated with the production and consumption of beer cans.

Expert Answers
pohnpei397 eNotes educator| Certified Educator

Externalities are costs that arise in an economic transaction that end up being borne by people who were not part of the transaction.  If you are talking about the production and consumption of beer cans, rather than beer itself, here are some externalities.

In the production, externalities could include the pollution caused by the mining of aluminum ore and the pollution/contributions to global warming caused by the use of electricity to make the ore into aluminum.  These kinds of pollution affect people whether or not they buy beer cans.

The most obvious externality caused by the consumption of beer cans would be the landfill space taken up by the cans if they are not recycled.  This space must be paid for by taxpayers whether they consume beer cans or not.

The most likely way for government to minimise these externalities is through regulation.  The government could impose regulations that would limit the pollution caused by the production of beer cans.  Alternatively, it could force the polluters to pay for cleaning up the pollution they cause.  Either of these would minimize the externalities.

parama9000 | Student

The externalities would be:

The resources needed to make the beer

The resources needed to make the can

The resources needed to contain the cans, land area in this sense.