If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08,what is the marginal external cost?
A) $0.18
B) $0.10
C) $0.08
D) $0.02
E) $0.80

Question

Quizplus · Accepted Answer

The marginal external cost can be calculated as the difference between the marginal social cost and the marginal private cost. Therefore, the marginal external cost in this situation is:

$0.10 − $0.08 = $0.02

Thus, the answer is D) $0.02.

If the Marginal Social Cost of Generating a Kilowatt of Electricity