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I am unable to understand why a current carrying loop is considered a dipole. Why exactly is it called a "dipole", which two poles are we referring to and how do those two poles function as the north and south pole of a magnet?

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The current loop creates a magnetic field. This field looks just like that of a magnet, which has two poles (a dipole).

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A long way away from the current loop, compared with its characteristic linear dimension (for example its diameter) the magnetic field, $\vec{B}$, follows an inverse cube law and is exactly the same in magnitude and direction as the field due to a small dipole (of suitable strength and orientation) whose poles give rise to inverse square law radial fields, one inwards, one outwards. This result is derived in old fashioned textbooks.

However, close to the current loop things are very different. The most important difference is that a true dipole's field lines would start on one pole and end on the other, whereas the field lines due to a current loop are themselves closed loops without ends, linked around the current loop. This means that along the line joining the poles of a true dipole the field would run in the opposite direction from the field due to the current loop!

There is no such thing, as far as we know, as a true magnetic dipole, that is a North pole from which the field is radially outwards and a South pole to which the field is radially inwards. So a current-carrying loop doesn't have a North and South pole in this sense. But if all we're concerned about is its distant field, it does behave as if it had poles (see first paragraph). Even so, the positions of these poles are to some degree arbitrary: two poles closer together are equivalent to two weaker poles further apart!

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    $\begingroup$ Re "true magnetic dipole" , did you mean pole or monopole? $\endgroup$ – user45664 Jul 19 '18 at 16:50
  • $\begingroup$ Neither. I mean a North pole (monopole) and a South pole (monopole) separated by a very small distance. $\endgroup$ – Philip Wood Jul 19 '18 at 17:06
  • $\begingroup$ @Philip Wood There is no such thing. The south is where the field lines go in and the north where they come out. The argument that the lined do not "start" or "end" is invalid. Also for a permanent bar magnet the lines continue inside the material. $\vec \nabla \cdot \vec B = 0$. $\endgroup$ – my2cts Jul 19 '18 at 17:18
  • $\begingroup$ @my2acts I think you have misunderstood my comment, possibly because you haven't taken it in the context of my answer. $\endgroup$ – Philip Wood Jul 19 '18 at 17:40

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