15 Nov 2021
Problem 17
Page 295
Section: REVIEW QUESTIONS
Chapter 12: Environmental Protection and Negative Externalities
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15 Nov 2021
Introduction
Private Cost is defined as the cost borne by an individual or a firm that are directly involved in a transaction.
Social Cost is defined as the sum of the private costs which is resulting from a transaction and the costs levied on the consumers as a result of being exposed to the transaction for which they are not compensated. In other words it is the sum of external costs and personal costs.
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