The cost thingy your talking about is reffered to as
EXTERNALITIESBear with me a sec while i try to explain it
social costs are made up of
private costs and
external costs,
social benefits are made up of
private benefits and
external benefitsnow i suppose your asking what do they mean?
well private costs are those
costs incurred by a firm in production of goods or selling services, which would be things like raw material costs, labour costs, overheads etc.
external costs are the
costs to society that arise as the result of a business decision. for example, if a firm decides to dump waste materials in the river to reduce costs of disposing it in a safe manner, the cost to society in this case is the amount of money that they have to pay to clean up the river. they do not always have to be costs in monetary terms, external cost could also be pollution.
private benefits are the
benefits that the firm achieves from production, for example profits.
external benefits are those
benefits to the society that occur as the result of a business decision, for example the decision made by the owners of a business to set up in a place of high unemployment and recruit local people, in this case the external benefit is the jobs that people are now gettingas aresult of the factory setting up.
Hope that helps =)
