Social Cost = Private Cost + External Cost (Negative Externalities)
Social Cost is the combination of private costs and external costs. Private costs are the expenses of the firm in producing the good/service. External costs are the expenses that society has to take as a result of the production or consumption of the good. Using cigarettes as an example, the private costs of producing cigarette is the workers, the factory, the material required to make the cigarettes. The external costs would be the health of consumers, the health of general public, the visual, air, water and noise pollution from the factory and the traffic congestion caused. The social cost would be all of them combined, and so in this case, it would be wage of workers, factory rent, material, health of consumers, the health of people around them, the different types of pollution and traffic congestion.