Which of the following equations is correct?
A) MC = MSC + marginal external cost
B) MSC = MC ÷ marginal external cost
C) MSC = MC + marginal external cost
D) MSC = MC × marginal external cost
E) MC = marginal external cost - MSC

Question

Quizplus · Accepted Answer

The correct formula for calculating the social cost of production is MSC = MC + marginal external cost, which means that the marginal private cost (MC) incurred by a producer must account for any externalities (marginal external cost) imposed on society. Therefore, option C is the correct equation.

Which of the Following Equations Is Correct