Social Cost and Benefit

External marginal costs are additional costs imposed on third parties when one more unit of a good or service is produced or consumed. These costs are not borne by the producer or consumer but by others outside the market exchange.

External marginal benefits are additional benefits received by third parti...

Private costs and benefits are the financial impacts on individuals or businesses directly involved in a transaction.

However, when an additional unit of a product is produced or consumed, these activities can generate costs or benefits that extend beyond the immediate parties, affecting others not directly involved in the transaction. Th...