1. Welfare Economics: Consideration of Externalities in the Agricultural Production Process Eduardo Segarra Professor of Agricultural and Applied Economics Texas Tech University

2. D P Q B

3. D P Q Q* P*

4. Q Q* D P Consumer Surplus P*

5. P Q S C

6. P Q S Q* P*

7. Producer Surplus P Q S Q* P* Cost of Production

8. D P Q CS Total Surplus = CS + PS PS Q* S P* Cost of Prod.

9. P Q Q* P* P Q Q* E W Externality Cost CS PS E*

10. P Q P Q P Q A B C D S Q* Q1Q1 EDED ESES M EXPORTING COUNTRY M K S D Q5Q5 Q* M IMPORTING COUNTRY F G H DEDE I J K I + J WORLD PRICE

11. P Q P Q Q*Qf Q* E I P Q P Q P Q A B C D S Qf EDED ESES K S D Q* F G H DEDE I J K I + J WORLD PRICE