7.4 Private costs and benefits, externalities and social costs and benefitsSyllabus9708–2026–2027Topic7.4LevelA2
What you’ll learn7 learning objectivesChoose one objective for a focused lesson, or study the complete topic.7.4.1Social costs• Definition and calculation of social costs (SC) as the sum of private costs (PC) and external costs (MEC)Syllabus objective7.4.2Social benefits• Definition and calculation of social benefits (SB) as the sum of private benefits (PB) and external external benefits (MEB)Syllabus objective7.4.3Positive and negative externalities• Definition of positive externality and negative externalitySyllabus objective7.4.4Externalities in consumption/production• Positive and negative externalities of both consumption and productionSyllabus objective7.4.5Deadweight welfare loss• Deadweight welfare losses arising from positive and negative externalitiesSyllabus objective7.4.6Asymmetric information and moral hazard• Asymmetric information and moral hazardSyllabus objective7.4.7Costs/benefits in decision analysis• Use of costs and benefits in analysing decisions (knowledge of net present value is not required)Syllabus objective