Which of the following is NOT a component of social costs?

Social costs refer to the total costs to society as a result of an economic activity, encompassing both private costs and external costs. Private costs are the expenses directly incurred by individuals or firms involved in a transaction or activity, while external costs are those that impact third parties who are not directly involved, such as pollution or other negative effects on the community.

By contrast, government subsidy costs, being the financial support provided by the government to encourage or support certain activities, do not inherently belong to the notion of social costs. They are separate financial mechanisms that can affect the market but don't represent costs borne by society as a whole in the same manner as externalities or private expenses. While they can influence behavior and market outcomes, they are not included in the overall model of social costs that aims to capture the total impact of an activity on society.

Thus, identifying government subsidy costs as not being a component of social costs is correct, as it distinguishes between direct costs associated with production or consumption and the broader implications of externalities that influence third-party welfare.