ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Marginal social benefit is equivalent to the private marginal benefit plus the external benefits of a product. It means that the marginal social benefit provides the total marginal utility of the unit of production to society.

Detailed explanation-2: -Social benefits include the private and external benefits resulting from a particular business activity e.g. jobs created, rise in tax revenue for government. Formula: Private Benefit + External Benefit = Social Benefit. Social costs are the private costs plus the external costs e.g. jobs lost, increased traffic.

Detailed explanation-3: -Private benefits are benefits that directly affect those who purchase and use a good. External benefits are the benefits that another person who isn’t the buyer or seller gets.

Detailed explanation-4: -Social benefits (or social transfers) are transfers made (in cash or in kind) to persons or families to lighten the financial burden of protection from various risks.

Detailed explanation-5: -Private costs refer to direct costs to the producer for producing the good or service. Social cost includes these private costs and the additional costs (or external costs) associated with the production of the good which are not accounted for by the free market.