An external cost can be calculated as the difference between
A) the social cost of production and the private cost of production.
B) the social cost of production and the social benefit of production.
C) the private cost of production and the social benefit of production.
D) a producer's cost of production and the price at which the good is sold.

Question

Quizplus · Accepted Answer

External costs, also known as externalities, are costs of a production process that are not borne by the producer but are instead borne by other members of society. The difference between the social cost (which includes both the private cost and the external cost) and the private cost of production accurately represents the external cost.

An External Cost Can Be Calculated as the Difference Between