Which of the following is TRUE?
A) private cost + average cost = social cost
B) social cost = private cost + external cost
C) external cost = private cost
D) private cost + social cost = external cost

Question

Quizplus · Accepted Answer

Social cost includes both private costs (the cost incurred by the producer) and external costs (the cost imposed on others outside the transaction). Therefore, social cost equals private cost plus external cost.

Which of the Following Is TRUE