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This graph shows the effect of earthquakes on the local economy. If an earthquake damages business’ capital and infrastructure, aggregate supply may fall. If supply falls the revenue made by firms will also fall. This will reduce the tax income of the Government, increasing the government deficit and reducing the ability of the economy to grow.
This graph shows the negative externalities in production. Fracking sites create negative externalities in the form of pollution, earthquakes and water consumption, causing a net welfare loss for the local population around fracking sites. There are arguments both for and against the implementation of fracking around the world. However if fracking were to be implemented, who should benefit? Should it be the local communities, the energy suppliers or land owners? Fracking is a case of compromising. Different people have different views on whether fracking should be implemented or not. Either way, if fracking is implemented or not some people will benefit while others will be impacted upon. To determine whether fracking should be allowed or not the impact upon global economies must be
42 https://friedmanseconomy.wordpress.com/tag/ppf/
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