Marginal Cost/Benefit
Réussis tes devoirs et examens dès maintenant avec Quizwiz!
Market (Private) Costs
costs recognized by market participants
Marginal Benefit
The amount of satisfaction received from consuming the last unit of a good or service
Marginal Cost
The cost to buy or produce one more unit of a good or service. Includes vale of alternatives given up to produce that unit (opportunity cost) Marginal Cost= Direct Costs (out of pocket) + Indirect Costs (opportunity cost)
Marginal Social Cost (MSC)
Cost of what is and isn't perceived by the market. Market costs + external costs= social costs
Decision Rule
If MSB > MSC, Do it!
External Costs
Costs occurred not recognized by market participants
Marginal Social Benefit (MSB)
Market benefit + external benefit= social benefit Last event/decision creates MSB
