social opportunity cost

Quick Reference

The amount of other goods which has to be forgone because resources are used to make some particular good. When any goods or services are produced, the resources used to make them are not available for other purposes. Social opportunity cost takes account of any externalities, as well as direct costs to the producers. It is contrasted with private opportunity cost, which takes account only of direct opportunity costs to the producers, disregarding any externalities.

Subjects: Economics.

Reference entries