rcom

• What are private costs?

  Costs paid by direct participants
• How do private costs relate to making a car?

  They include paying for workers and materials
• What are external costs?

  Costs affecting uninvolved people
• How does a factory's pollution represent an external cost?

  It causes health problems for nearby residents
• What are social costs?

  Total costs including private and external costs
• How are social costs calculated in a factory scenario?

  Private costs plus pollution cleanup costs
• What are private benefits?

  Benefits enjoyed by direct participants
• How does going to school provide private benefits?

  It leads to better jobs and higher salaries
• What are external benefits?

  Benefits that help uninvolved people
• How does vaccination represent an external benefit?

  It reduces the spread of disease to others
• What are social benefits?

  Total benefits including private and external benefits
• How are social benefits calculated in a company training scenario?

  Private benefits plus improved skills in the economy
• What happens when negative externalities are ignored?

  It leads to too much production of harmful goods
• How do positive externalities affect production levels?

  They can result in not enough activities happening
• What role do taxes play in government intervention?

  They reduce activities that create external costs
• How do subsidies function in government intervention?

  They encourage activities with external benefits
• What is the purpose of regulations in government intervention?

  To reduce harm and promote helpful actions
• How do negative externalities affect social welfare?

  They reduce overall social welfare
• How do positive externalities impact society?

  They can harm society by reducing activities
• What is the relationship between private costs and social costs?

  Social costs include private costs and external costs
• How do private benefits relate to social benefits?

  Social benefits include private benefits and external benefits
• How can government intervention correct market failures caused by externalities?

  By using taxes, subsidies, and regulations