Private cost - Revision history

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	~~[[Category:Done 2016-04-30]]~~		<onlyinclude>The '''private cost''' is any cost that a person or firm pays in order to buy or produce goods and services. This includes the cost of labour, material, machinery and anything else that the person of firm physically pays for. The private cost does not take into account any negative effects or harm caused as a result of the production.</onlyinclude><ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Private Cost." [Online]. Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-2443?rskey=EdV34K&result=1, 2009 [June 28, 2016]</ref>
	<onlyinclude>The '''private cost''' is any cost that a person or firm pays in order to buy or produce goods and services. This includes the cost of labour, material, machinery and anything else that the person of firm pays for. The private cost does not take into account any negative effects or harm caused as a result of the production.</onlyinclude><ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Private Cost." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-2443?rskey=EdV34K&result=1, 2009 [June 28, 2016]</ref>

	A firm that operates a [[coal-fired power plant]] only considers the cost of what goes into producing [[electricity]] such as the cost of [[coal]], labour to operate the plant etc. The plant produces harmful [[emissions]] such as [[carbon dioxide \| CO<sub>2</sub>]] ~~and~~ [[particulate matter]] ~~among~~ [[pollution \| others]]. These emissions have a negative effect of society, pollution increases the ~~incidents~~ of respiratory illness which increases the burden on the healthcare system. ~~The~~ cost is paid by the government (or healthcare system).		[[File:ferrybridge.jpg\|thumb\|Figure 1. A coal fired power plant in England.<ref>Wikimedia Commons [Online]. Available: https://upload.wikimedia.org/wikipedia/commons/7/76/Ferrybridge_%27C%27_Power_Station_-_geograph.org.uk_-_35089.jpg</ref>]]
			As an example, firm that operates a [[coal-fired power plant]] only considers the cost of what goes into producing the [[electricity]]: such as the cost of [[coal]], labour to operate the plant, etc. The plant produces harmful [[emissions]] such as [[carbon dioxide \|CO<sub>2</sub>]], [[particulate matter]], and[[pollution \| others]]. These emissions have a negative effect on society, pollution increases the amount of respiratory illness incidences which in turn increases the burden on the healthcare system. This "[[external cost]]" is paid by the government or the healthcare system.

	Because the firm does not pay the cost for the harm they create an inefficiency in the market, this inefficiency is called a [[~~externality \|~~ negative externality]]. ~~This~~ can be corrected if the firm ~~is made to pay~~ the private cost of production and the cost imposed on society from the emissions ~~called~~ the [[external cost]]. If the firm pays both costs ~~the~~ it is paying the [[social cost]] meaning that it has accounted for the harmful effects that were previously not considered.		Because the firm does not pay the cost for the harm, they create an "inefficiency" in the market, this inefficiency is called a [[negative externality]]. The inefficiency can be corrected if the firm pays the private cost of production ''and'' the cost imposed on society from the emissions (the external cost). If the firm pays both of the costs, it is paying the "[[social cost]]," meaning that it has accounted for the harmful effects that were previously not considered. The social cost is the total cost: private and external.

	The ~~social~~ cost is the ~~private~~ and the ~~external cost together~~.		The cost of production would rise to a "socially efficient level" (meaning there is no externality) if: the firm took additional measures to lower or eliminate the amount of emissions from generation. In this example, the firm could invest in new [[air pollution control devices]] to lower emissions. However, the new investment makes the generation of electricity more expensive and therefore the price the firm sells their electricity for would rise.

	~~The cost of production would rise to the socially efficient level (no~~ externality~~) if the firm took additional measures to lower or eliminate the amount of emissions from generation. The firm would have to invest in new~~ [[~~air pollution control devices~~]] ~~in order to lower emissions. The new investment makes the generation of electricity more expensive and therefore the price the firm sells their electricity for would have to rise.~~		==See Also==
			*[[Market failure]]
			*[[Pollution]]
			*[[Deadweight loss]]
			*[[Positive externality]]
			*[[Negative externality]]
			* Or explore a [[Special:Random\|random page]]

	==References==		==References==
	{{reflist}}		{{reflist}}
			[[Category: Uploaded]]
			[[Category:Done 2026-06-01]]

Jmdonev: 1 revision imported: From the summer

2016-09-17T22:29:41Z

1 revision imported: From the summer

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Jmdonev at 01:48, 4 August 2016

2016-08-04T01:48:51Z

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[[Category:Done 2016-04-30]]
<onlyinclude>The '''private cost''' is any cost that a person or firm pays in order to buy or produce goods and services. This includes the cost of labour, material, machinery and anything else that the person of firm pays for. The private cost does not take into account any negative effects or harm caused as a result of the production.</onlyinclude><ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Private Cost." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-2443?rskey=EdV34K&result=1, 2009 [June 28, 2016]</ref>

A firm that operates a [[coal-fired power plant]] only considers the cost of what goes into producing [[electricity]] such as the cost of [[coal]], labour to operate the plant etc. The plant produces harmful [[emissions]] such as [[carbon dioxide | CO<sub>2</sub>]] and [[particulate matter]] among [[pollution | others]]. These emissions have a negative effect of society, pollution increases the incidents of respiratory illness which increases the burden on the healthcare system. The cost is paid by the government (or healthcare system).

Because the firm does not pay the cost for the harm they create an inefficiency in the market, this inefficiency is called a [[externality | negative externality]]. This can be corrected if the firm is made to pay the private cost of production and the cost imposed on society from the emissions called the [[external cost]]. If the firm pays both costs the it is paying the [[social cost]] meaning that it has accounted for the harmful effects that were previously not considered.

The social cost is the private and the external cost together.

The cost of production would rise to the socially efficient level (no externality) if the firm took additional measures to lower or eliminate the amount of emissions from generation. The firm would have to invest in new [[air pollution control devices]] in order to lower emissions. The new investment makes the generation of electricity more expensive and therefore the price the firm sells their electricity for would have to rise.

==References==
{{reflist}}