What are social costs?

Social costs are a term that is sometimes used in economic discussions to apply to the costs that others experience when specific types of goods and services are purchased. This differs from the concept of private costs, which focuses on the costs that the individual experiences when choosing a purchase of specific goods or services. The idea of ​​understanding social costs is to help find out whether the production and sale of certain goods create sufficient benefits for the general population that the costs of the same people are compensated.

A classic example of how social costs in the operation of AmanuFacturing Company, which produces a number of goods considered a highly desirable number of consumers. Although there is no doubt that some benefits will be obtained by purchasing these goods, the production process itself can lead to costs that compensate at least part of Those benefits. For example, if the production plant significantIt will increase the amount of pollution found in the local environment, social costs may include the loss of wild animals and disturbance of the environmental balance of the area. In some cases, the proximity of the plant may have an adverse impact on the values ​​of the surrounding property. Depending on the nature of pollution, social costs may also include an increased chance for people living in this area to develop certain types of health problems that in turn put further emphasis on local healthcare facilities and increase health care costs to those affecting these diseases.

While most types of trade include a certain level of social costs, the amount of cost can be minimal and easily compensated by the benefits derived from business operations. Using the same example of the production plant, the company can use a number of strategies that reduce the trace of operation to local environment. Instead of reducing real estate values, the presence of surgery can stimulate more people to move to the area, increase pOptage and value of a limited number of houses and real estate available for sale. As the company grows by adding new employees, the local community can also increase to the extent that more retailers have moved to the area and the scope of health services offered also increases, adding value to the quality of life in the local community.

In its simplest state, social costs are primarily about assessing the potential obligations of the action or community operations in general, rather than simply consider the costs that the individual assumes to take specific steps or purchase a certain product that brings a limited range of benefits and obligations for this individual. Over time, many communities were more aware of the need to assess social costs as a means of protecting the qualification of life in ThosSpolečnost, while also trying to ensure the highest level of social benefits. This approach has led to the need for some reforms in different communities, especially in terms of environmental protectionAnd improved health conditions for people who live in the immediate area.