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The existence of external benefit and external cost leads to misallocation of resources. External cost For example, when drivers are not liable for the health damage of car exhaust, drivers will equate only marginal private cost with marginal benefit. But if drivers are forced to pay for the health damage of car exhaust, their marginal cost will go up by the amount of the external cost.
Indirect costs are often lumped together to form the general category, overhead. Indirect costs would include all administrative costs, plus accounting, sales, marketing, human resources, engineering, quality control, quality assurance, research and development, maintenance, utilities, and shipping and receiving.