Private benefit and social benefit, Microeconomics

Private benefit and social benefit:

Bridge the gab between private cost and social cost, and private benefit and social benefit.Under perfect market, there may be a divergence between social and private cost on one hand and social and private benefit on the other. This occurs as a result of the existence of externalities (benefits provided to or costs imposed on third parties as a result of the production or consumption of goods or services). Because of external benefits many projects which are needed may not be profitable under pure market system in which all investment decisions are left to the private individuals. The level of investment may fall below the social optimum because private investors ignore external benefits and supplementary benefits of projects in calculating the prospective returns of their investment.

Posted Date: 1/3/2013 1:09:05 AM | Location : United States

Related Discussions:- Private benefit and social benefit, Assignment Help, Ask Question on Private benefit and social benefit, Get Answer, Expert's Help, Private benefit and social benefit Discussions

Write discussion on Private benefit and social benefit
Your posts are moderated
Related Questions
Instructions to Students 1. Answer all the questions, using economic models where appropriate. Begin a question on a new page. 2. Please attach a copy of the assignment cove

What is development economics? Traditional economics studies the allowance of scarce resources among alternative uses. Development economics seems at the economic, politica

The prevention of major swings in economic activity can be handled most easily by the

Direct and Indirect Benefits Life time earnings of an educated person is an instance of direct benefit from education. Skills produced in training or extension programmes in a

advantage dis advantage of pure monopoly

define opportunity cost and how it is useful in managerial decision making?

Institutionalist Economics: A school of heterodox economicsthat emphasizes importance of institutional development and evolution (as opposed to ‘pure' market forces) in explaining

how much for taking a test

What types of questions would concern microeconomics, versus macroeconomics? Microeconomics concerns itself with decision-making of individual consumers, firms  and other organ