Hello, last video on negative externalities there was the formula of social benefits= private benefits - external benefits, while here for social costs=private costs + external costs. Can you please explain the difference?
For negative consumption externalities the formula is social benefits = private benefits + external benefits. However, since the consumption externality is negative there is not a positive external benefit, but a negative external benefit. Think of it like this, +5 = +6 + -1. So +5 = +6-1 OR 5 = 6-1.
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Probably the best econ videos ever
Nicely explained...thnku so much...
Ya......same ^_^
Same >_
Hello, last video on negative externalities there was the formula of social benefits= private benefits - external benefits, while here for social costs=private costs + external costs. Can you please explain the difference?
For negative consumption externalities the formula is social benefits = private benefits + external benefits. However, since the consumption externality is negative there is not a positive external benefit, but a negative external benefit.
Think of it like this, +5 = +6 + -1. So +5 = +6-1 OR 5 = 6-1.
Why did I not go here first
Good question.