Marginal Social Cost (MSC)
Definition
Marginal Social Cost refers to the additional cost imposed on society from producing one more unit of a good or service. It includes both the private cost borne by producers and any external costs that affect society as a whole.
Analogy
Think about organizing a concert in your neighborhood park. As more people attend, there will be increased noise, traffic congestion, and potential damage to the park. Marginal Social Cost is like measuring how much extra inconvenience and negative impact each additional attendee imposes on everyone.
Related terms
Private Cost: The cost borne by producers in terms of resources used for production.
External Costs: Negative effects experienced by third parties not directly involved in the consumption or production of a good or service.
Marginal Benefit: The additional benefit received from consuming one more unit of a good or service.
"Marginal Social Cost (MSC)" appears in:
Study guides (2)
Additional resources (2)
Practice Questions (1)
- In a market where the marginal social benefit (MSB) exceeds the marginal social cost (MSC), which of the following is true?
Resources
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