Principles of Microeconomics / Unit 11 MIC 1002 short lesson, about 20 seconds
Private Cost, External Cost, Social Cost
Captions available
The idea
Private cost is what a firm pays; external cost is what it imposes on others. Social cost is their sum, and supply drawn from private cost alone sits too low.
In practice
A paint can costing forty to make and doing ten dollars of river damage costs society fifty.
Where people slip
Supply is marginal cost only when every cost is the seller's; an externality breaks that.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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