The differences between the private and social costs of economic behavior are known as

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Externalities refer to the effects of economic activities on third parties, which can be positive (beneficial) or negative (costly). The private costs are the costs incurred by the individual or company engaging in the economic activity, while the social costs are the costs incurred by the society as a whole. Therefore, externalities arise when the private and social costs differ, and they are a type of market failure.

The Differences Between the Private and Social Costs of Economic