-The figure above illustrates the marginal private cost and the marginal social cost to the city of Geelong for each rock concert that is offered. Suppose the marginal private cost of the 5th concert is $10,000. Then, for the 5th concert, the
A) marginal external cost equals the marginal private cost.
B) marginal external cost equals $30,000.
C) marginal external cost equals $40,000.
D) marginal social cost equals $30,000.
E) marginal external cost equals $10,000.

Question

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Geelong for each rock concert that is offered. Suppose the marginal private cost of the 5th concert is $10,000. Then, for the 5th concert, the
A) marginal external cost equals the marginal private cost. 
B) marginal external cost equals $30,000. 
C) marginal external cost equals $40,000. 
D) marginal social cost equals $30,000. 
E) marginal external cost equals $10,000.

Quizplus · Accepted Answer

The marginal social cost is the sum of the marginal private cost and the marginal external cost. If the marginal private cost is $10,000 and the marginal social cost is $40,000, then the marginal external cost must be $30,000.

-The Figure Above Illustrates the Marginal Private Cost and the Marginal