Give an example that illustrates the difference between private costs and social costs.
Private cost is a cost that includes cost which is paid personally for the use
But in social cost, the externality is also added
Let us clear it with an example-suppose I own a new Yamaha bike so I paid for its price, insurance, road tax etc.and they are called private cost because I have paid for them
But unknowingly or knowingly I also contribute towards polluting the environment which comes under negative externality and has some social cost. Here, with private cost, the externality is also added.
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