Social cost in economics may be distinguished from "private cost". Economic theorists model individual decision-making as measurement of costs and benefits. Rational choice theory often assumes that individuals consider only the costs they themselves bear when making decisions, not the costs that may be borne by others.
With pure private costs, the costs carried by the individuals involved are the only economically meaningful costs. The choice to purchase a glass of lemonade at a lemonade stand has little consequence for anyone other than the seller or the buyer. The costs involved in this economic activity are the costs of the lemons and the sugar and the water that are ingredients to the lemonade, the opportunity cost of the labour to combine them into lemonade, as well as any transaction costs, such as walking to the stand.
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Famous quotes containing the words social and/or cost:
“Edith: Does anybody want me to flatter and be untruthful? Hotchkiss: Well, since you ask me, I do. Surely its the very first qualification for tolerable social intercourse.”
—George Bernard Shaw (18561950)
“Every new stroke of civilization has cost the lives of countless brave men, who have fallen defeated by the dragon, in their efforts to win the apples of the Hesperides, or the fleece of gold. Fallen in their efforts to overcome the old, half sordid savagery of the lower stages of creation, and win the next stage.”
—D.H. (David Herbert)