| Private cost |
A cost that a person (firm or consumer) incurs as part of its production or other economic activity |
| External cost |
A cost related to production or other economic activity of an individual, a firm, or a household that is borne by a third party and is not reflected in market prices. |
| Social costs |
The total of private and external costs |
| Private benefit |
The benefit received by a person, business, or consumer as a result of their economic activity |
| External benefit |
The benefit that society (a firm or household) receives from an economic action that benefits an external party (a firm or household) but is not represented in market prices |
| Social benefits |
The total of private and external benefits |
| Marginal private costs (MPC) |
Costs associated with producing an additional unit of output that is borne by a party involved in the production process |
| Marginal social costs (MSC) |
Costs asspciats with producing an additional unit of output, as experience by the entire society |
| Marginal private benefits (MPB) |
Those benefits that a person receives from consuming an additional unit of a good. |
| Marginal social benefits (MSB) |
The advantages that society gains from each additional unit consumed |
| Asymmetric information |
A situation when certain market participants are more knowledgeable than others about current market conditions. |
| Externality |
A cost or benefit that is not included in market prices because it is an external cost or benefit to a market transaction. |
| Consumption externality |
An externality that affects a market's consumer side and can have either a positive or negative influence |
| Production externality |
An externality that affects a market's production side and can have either a positive or negative impact |
| Nationalization |
A procedure by which businesses from the private sector merge into the public sector of the economy, resulting in the state or the government directly providing certain goods and/or services. |
| Privatization |
The process through which assets are transferred from the public sector to the private sector, making public sector businesses a part of the economy's private sector and removing the state or government from the direct provision of certain goods and/or services. |
| Equity |
The notion of justice or fairness, as in how output is distributed. |
| Equality |
The notion that all individuals within a group or society have equal rights and obligations. |
| Efficiency |
The most efficient or optimal use of limited resources. |
| Absolute poverty |
A situation where household income is insufficient to maintain the minimum requirements for food, shelter, and housing. |
| Relative poverty |
A situation where household income falls below a nation's median income by a certain percentage. |