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
suppose the production function is given as:X=b0Lb1Kb2,where b0=level of technology find marginal product of factors(MPL0and MPK) find factor intensity

Define the generality of economic theory in the modern economics. Generality of Economic Theory An economic theory is based onto assumptions imposed onto economic environmen

Consider the following insurance market. There are two states of the world, B and G, and two types of consumers, H and L, who have probabilities pH =0.5 and pL =0.25 (high and low

Determinants of reserve price

THEORY OF REVEALED PREFERENCE: If consumer's taste and preferences do  not change, then observation of her market behaviour or, actual act of choice between the commodity sets

Need help with Free responds

Question 1: (a) Discuss the adjustment to an increase in demand for a perfectly competitive market in the: (i) Short run (ii) Long run (b) How would the same industry

How did fixed exchange rates and the Golden Standard affect the U.S. economy as well as other countries.

Type of total outlay

RECENT DEVELOPMENT IN DEMAND ANALYSIS: For many years economic theorists analysed the optimal behaviour of consumers while econometricians estimated consumer demand and expend