Explain the Differences Between External Costs,private Costs,and Social Costs and How

question 14

Essay

Explain the differences between external costs,private costs,and social costs and how the presence of external costs leads to market failure.

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Definitions:

Book Value

The value of an asset as recorded on a company's balance sheet, calculated as its cost minus accumulated depreciation.

Adjusting Entry

An accounting journal entry made to update the accounts and reflect the correct financial position before financial statements are prepared.

Liability Account

An account on the balance sheet that represents obligations to pay debts or amounts owing to lenders, suppliers, employees, or other creditors.

Rent Received

Income earned from leasing out property or equipment to another party.