Below is a very good documentary on the construction of the largest dam in the world – the Three Gorges Dam in China. However in its construction there are both costs and benefits including private and external. This is a topic in Unit 3 of the CIE A2 Economics syllabus and is found under – Externalities. Remember that we have both positive and negative externalities of production and consumption.
THE DIFFERENCE BETWEEN PRIVATE AND SOCIAL COSTS
Externalities create a divergence between the private and social costs of production.
|SOCIAL COST = PRIVATE COST + EXTERNAL COST (externality)|
- Private costs are the costs to a ‘firm of producing a good or service and to an individual of consuming a product.
- External costs are the spill over effects on third parties.
- Social costs are obtained by adding the private and external costs together. They reflect the total cost to society of…
View original post 104 more words