Externalities in Supply and Demand:

The  usual economic analysis  of  externalities  can  be  illustrated using a standard supply and  demand diagram  if  these can be monetised (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 (in competitive markets,  the marginal private cost)  and  the  other curve is  the true cost that  society  as a whole pays for production and consumption of increased production the good (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.