The marginal private cost curve (MC)is a positively-sloped straight line starting at the origin.If marginal external cost increases as output increases,then the marginal social cost curve is a positively-sloped straight line
A)parallel to and above the MC curve.
B)parallel to and below the MC curve.
C)above the MC curve,and with a slope greater than the MC curve.
D)below the MC curve,and with a slope less than the MC curve.
E)above the MC curve,with a slope less than the MC curve.

Question

Quizplus · Accepted Answer

If marginal external cost increases as output increases, then the MSC curve will be higher than the MC curve because it includes the external costs. Moreover, its slope will be steeper than that of the MC curve because of the additional costs. Therefore, the best choice is (C)above the MC curve, and with a slope greater than the MC curve.

The Marginal Private Cost Curve (MC)is a Positively-Sloped Straight Line