The cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal
A) private cost.
B) social benefit.
C) external cost.
D) social cost.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

An external cost is a cost that is not borne by the producer but by society as a whole, leading to a divergence between private costs and social costs. Therefore, the cost of producing an additional unit of a good or service that falls on people other than the producer is a classic example of an external cost.

The Cost of Producing an Additional Unit of a Good