PRIVATE COSTS AND SOCIAL COSTS

Private costs and Social costs:

• Private costs are costs actually incurred or provided for by firms and are either explicit or implicit.
•  They normally figure in business decisions as they form part of total cost and  are internalised by the firm. 
• Social cost, on the other hand, refers to the total cost borne by the society on account of a business activity and includes private cost and external cost. 
• It includes the cost of resources for which the firm is not required to pay price such as atmosphere, rivers, roadways etc. and the cost in terms of dis-utility created such as air, water and environment pollution.