The usual economic analysis of externalities can be illustrated using a standard supply and demand diagram if the externality can be valued in terms of money . An extra supply or demand curve is added, as in the diagrams below. One of the curves is the private cost that consumers pay as individuals for additional quantities of the good, which in competitive markets, is the marginal private cost. The other curve is the true cost that society as a whole pays for production and consumption of increased production the good, or the marginal social cost . Similarly there might be two curves for the demand or benefit of the good. The social demand curve would reflect the benefit to society as a whole, while the normal demand curve reflects the benefit to consumers as individuals and is reflected as effective demand in the market.
The growth in prosperity of the colonies and sense of independence among colonists eventually led to the separation of the colonies from British rule in 1774. Prior to gaining independence, however, the colonies remained a British territory. Having oversight from Britain proved to be most beneficial when the colonies were first established. Britain provided support in the form of revenue and some resources, although the colonial lands soon proved to have an abundance of key natural resources too, which significantly expanded the scope of trade. Colonies engaged in direct trade with England; raw materials and finished goods flowed between the colonies and Britain. Eventually, the colonies joined a triangular trade route with Africa and Britain. Raw materials, slaves and British goods moved around the designated trade triangle.