AFRE 265: ECOLOGICAL ECONOMICS In-Class Activity 4: Externalities This activity will help you develop and apply the concepts of externalities using the supply (MC), demand (MB), and equilibrium framework we have built up. Part 1: Building Demand and Supply Curve Consider the following supply and demand schedule for electricity. Note that the demand curve represents marginal social benefits (MSB) while the supply curve represents marginal private costs (MPC) as production generates negative externalities. Q_D indicates quantity demanded in the market, and Q_s is quantity supplied in the market.(1 pt) Graph the private market supply and market demand for electricity. Show the private equilibrium by labeling the private equilibrium price Pp and private equilibrium quantity Qp