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Figure: Dishwashing Detergent
-(Figure: Dishwashing Detergent) Refer to the figure. Dishwashing detergent contains phosphates that harm marine life. In this figure, SC represents the:
A) private cost of production plus the social cost of production.
B) social cost of production: the private cost plus the external cost.
C) social cost of production: the external cost less the private cost.
D) private cost of production.

Question

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Figure: Dishwashing Detergent 
-(Figure: Dishwashing Detergent) Refer to the figure. Dishwashing detergent contains phosphates that harm marine life. In this figure, SC represents the:
A) private cost of production plus the social cost of production. 
B) social cost of production: the private cost plus the external cost. 
C) social cost of production: the external cost less the private cost. 
D) private cost of production.

Quizplus · Accepted Answer

SC represents the social cost of production, which includes the private cost of production (i.e. the cost to the detergent manufacturer) plus the external cost (i.e. the harm to marine life caused by the release of phosphates into waterways). Therefore, option B is correct.

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