Social costs include

Question

Quizplus · Accepted Answer

Social costs include both private costs (costs borne by individuals or firms directly engaged in a transaction or activity) and external costs (costs imposed on third parties who are not directly involved in the transaction or activity). For example, a factory may produce goods at a low cost, but if it pollutes the surrounding environment, the cost is borne by others in the form of decreased property values, health problems, and environmental damage. The social cost of production would include both the private cost of producing the goods and the external cost of pollution. Therefore, the correct answer is A.

Social Costs Include