What is the Difference between “Private Cost” and “Social Cost”? – Explained!
Private Cost: Private cost refers to the cost of production incurred and provided for by an individual firm engaged in the production of a commodity. It is found out to get private profits.This cost has nothing to do with the society. It includes both explicit as well as implicit cost. A firm is interested in minimising private cost. Image Source : sustainablejill.com Social Cost: ADVERTISEMENTS: Social cost refers to the cost of producing a commodity to the society as a whole. It takes into consideration all those costs, which are borne by the society directly or indirectly. Social cost is not borne by the firm. It is rather passed on to persons not involved in the activity in the direct way. Social cost is a much broader concept.It is found…