Marginal social cost is equal to _____
A)the total private cost of production.
B)marginal private cost.
C)marginal external cost.
D)marginal private cost plus marginal external cost.
E)marginal private cost divided by marginal external cost.

Question

Quizplus · Accepted Answer

Marginal social cost is the sum of marginal private cost and marginal external cost. Marginal private cost includes the costs of production incurred by the firm, while marginal external cost refers to the costs imposed on third parties that are not accounted for by the firm in their production decisions. Therefore, the correct choice is D, as it takes into account both types of costs.

Marginal Social Cost Is Equal to _____