| A | B |
|---|
| Private costs | Expenses for an individual firm or individual household. |
| Private benefits | Rewards received by an individual firm or household. |
| External costs | An expense caused by an individual firm but paid for by the community. |
| Social costs | When private and external costs are greater than private and external benefits. Society is worse off. |
| Social benefits | When private and external benefits are greater than private and external costs. Society is better off. |
| A commercial return | When a firm makes a good profit with regard to it’s investment. |
| Economic use of resources | When social benefits are greater than social costs. |
| Subsidy | A payment given to a firm by government so that an unprofitable good or service is provided. |
| Cost benefit analysis | A method used by economists to value external costs and benefits. |
| External benefits | A result from the action of a firm that is also useful to those outside of the firm. |
| Uneconomic use of resources | When social benefits are less than social costs. |
