Marginal Flashcards
External costs
A cost that is associated with an individual’s production or other economic activities which is borne by a third party.
Social costs
The total cost to society of a particular action.
Private benefit
The benefits directly accruing to a particular action.
External benefit
The benefits that accrue as a consequence of externalities to third parties.
Social benefit
The total benefits to society of a particular action.
? + ? = social costs
Private costs + external costs
? + ? = social benefit
Private benefit + external benefit
Marginal private cost
The cost to a firm of producing the last unit of a good. Aka supply curve of a good.
Marginal external cost
The additional cost generate when one extra unit of output is produced.
Marginal social cost
Is the cost to the firm, plus the external cost, of producing the last unit of a good.
Marginal private benefit
The benefit to the individual of consuming the last unit of a good. Aka the demand curve for a good.
Marginal external benefit
Is the additional benefit generate when one unit of output is produced.
Marginal social benefit
The benefit to the individual consuming the good, plus the external benefit, of the last unit of a good.
Private costs
A cost incurred by an individual as part of it’s production or other economic activities.
