| Private costs | met by producers | • labour costs • material costs | | --- | --- | --- | | External costs • negative externalities | spillover effects of production | • pollution (noise/ air/ water) → illness • resource depletion • traffic congestion • overcrowding | | Social costs | private costs + external costs | |
| Private benefit | met by consumers | • happiness |
|---|---|---|
| External benefit | ||
| • positive externalities | spillover effects of consumption | • treatment of contagious diseases: prevent others from catching |
| • education: benefits community | ||
| • cycling: reduce pollution/ congestion | ||
| Social benefit | private benefit + external benefit |