-The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal cost paid by the producers and everyone else in society when 100 billion kilowatt hours are produced is
A) 10 cents per kilowatt hour.
B) 5 cents per kilowatt hour.
C) 15 cents per kilowatt hour.
D) 0 cents per kilowatt hour.
E) 20 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 cost paid by the producers and everyone else in society when 100 billion kilowatt hours are produced is
A) 10 cents per kilowatt hour. 
B) 5 cents per kilowatt hour. 
C) 15 cents per kilowatt hour. 
D) 0 cents per kilowatt hour. 
E) 20 cents per kilowatt hour.

Quizplus · Accepted Answer

The marginal social cost is the cost to society of producing one more unit of a good or service, including both the private cost to the producer and the external cost to others. The marginal private cost is the cost to the producer of producing one more unit of a good or service. In this case, the marginal social cost curve is above the marginal private cost curve, indicating that there is an external cost to producing electricity. The marginal cost paid by the producers and everyone else in society when 100 billion kilowatt hours are produced is the height of the marginal social cost curve at that quantity, which is 10 cents per kilowatt hour.

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