If the marginal social cost of producing a tonne of cement is $4,000 and the marginal private cost is $3,500, then the
A) marginal external cost of producing a tonne of cement is $500.
B) marginal benefit of a tonne of cement will equal $4,000.
C) marginal external cost of producing a tonne of cement is $4,000.
D) marginal external cost of producing a tonne of cement is $7,500.
E) total cost of producing a tonne of cement is $7,500.

Question

Quizplus · Accepted Answer

The difference between the marginal social cost and the marginal private cost is the marginal external cost. Therefore, the marginal external cost of producing a tonne of cement is $500 ($4,000 - $3,500).

If the Marginal Social Cost of Producing a Tonne of Cement