Refer to the information provided in Figure 16.2 below to answer the question(s) that follow. Figure 16.2
-Refer to Figure 16.2. The ________ imposed as a result of producing automobiles is $10.00 per car.
A) marginal social cost
B) marginal damage cost
C) total cost
D) marginal private cost

Question

Refer to the information provided in Figure 16.2 below to answer the question(s) that follow.  Figure 16.2
-Refer to Figure 16.2. The ________ imposed as a result of producing automobiles is $10.00 per car.
A) marginal social cost 
B) marginal damage cost 
C) total cost 
D) marginal private cost

Quizplus · Accepted Answer

The cost imposed as a result of producing automobiles is a negative externality, which falls under the category of marginal damage cost. This cost is not accounted for in the marginal private cost, which only includes the cost of production to the producer. The marginal social cost includes the marginal private cost plus any external costs or negative effects on third parties. In this case, the marginal social cost is equal to the marginal private cost plus the marginal damage cost. Therefore, the best choice is B, as it correctly identifies the cost in question.

Refer to the Information Provided in Figure 16