A company earns $200,000 in profit.The total costs paid by the firm are $800,000.Production of the goods contaminates the river and small lakes,which reduces the profits of salmon fishermen by $90,000.The external cost to society of the company's production is
A) $90,000.
B) $110,000.
C) $200,000.
D) $600,000.

Question

Quizplus · Accepted Answer

The external cost to society of the company's production is the negative impact it has on others not involved in the economic transaction, in this case, the $90,000 loss in profits for salmon fishermen due to contamination.

A Company Earns $200,000 in Profit