Which term describes the total benefit from consuming a good or service including private benefit and any positive spillover effects?

• A. Social Benefit
• B. Private Cost
• C. Externalities
• D. Lorenz Curve

Answer: (A)

The main idea is that the total benefit from a good to society includes both the private benefit to the person consuming it and any positive spillover effects on others. When consumption creates benefits beyond the individual, those extra gains add to the overall value, and the term for this combined benefit is social benefit. For example, vaccination not only protects the person who gets vaccinated but also reduces the risk for others in the community, increasing social welfare. Education similarly boosts the individual’s outcomes and benefits the broader economy through a more skilled workforce, again reflecting social benefit.

Private benefit is just the gain to the individual from consuming the good, not counting effects on others. Externalities are the spillover effects themselves, whether positive or negative, that affect third parties. The Lorenz Curve is a chart used to show how income or wealth is distributed, not a measure of total benefit from consumption.