-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal external cost when 200 billion kilowatt hours are produced is
A) 0 cents per kilowatt hour.
B) 5 cents per kilowatt hour.
C) 20 cents per kilowatt hour.
D) 10 cents per kilowatt hour.
E) 15 cents per kilowatt hour.

Question

-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal external cost when 200 billion kilowatt hours are produced is
A) 0 cents per kilowatt hour. 
B) 5 cents per kilowatt hour. 
C) 20 cents per kilowatt hour. 
D) 10 cents per kilowatt hour. 
E) 15 cents per kilowatt hour.

Quizplus · Accepted Answer

The marginal external cost is the difference between the marginal social cost and the marginal private cost. At 200 billion kilowatt hours, if the marginal social cost is higher than the marginal private cost by 10 cents per kilowatt hour, that difference represents the marginal external cost.

-The Figure Above Shows the Marginal Social Cost Curve of Generating