Suppose a firm produces pollution when it generates electricity. The cost of the pollution for an additional unit of electricity is called the
A) marginal external cost.
B) marginal private cost.
C) marginal cost.
D) marginal social cost.

Question

Quizplus · Accepted Answer

The marginal external cost is the cost of the negative externality, such as pollution, that affects third parties when an additional unit of electricity is produced.

Suppose a Firm Produces Pollution When It Generates Electricity