What is net social benefit?

• A. Net social benefit equals total social benefit minus total social cost.
• B. Net social benefit equals private benefit minus private cost
• C. Net social benefit equals government revenue minus expenditure
• D. Net social benefit equals consumer surplus plus producer surplus

Answer: (A)

Net social benefit reflects the overall welfare change in society from a market activity. It is defined as total social benefit minus total social cost. Total social benefit includes all benefits to everyone in society (such as consumer surplus, producer surplus, and any external benefits). Total social cost includes all costs to everyone (private costs plus any external costs). This comprehensive measure captures the full impact on social welfare, including effects on third parties outside the market transaction.

That’s why this option is the best: it accounts for all benefits and all costs to society as a whole. Other options describe only private measures or specific financial tallies like government budgets, or they sum only private surpluses (which ignores externalities).