If there are external costs of production not accounted for, then marginal
A) cost equals marginal social cost.
B) cost is less than marginal social cost.
C) cost is greater than marginal social cost.
D) social cost is zero.

Question

Quizplus · Accepted Answer

When there are external costs of production not accounted for, the marginal cost paid by the firm is less than the marginal social cost, which includes both the private costs and the external costs.

If There Are External Costs of Production Not Accounted For