If a good has an external cost, then the marginal private cost curve
A) lies below the marginal social cost curve.
B) lies above the marginal social cost curve.
C) is negative.
D) is the same as the marginal external cost curve.

Question

Quizplus · Accepted Answer

The marginal private cost curve lies below the marginal social cost curve because the external cost is not accounted for in the private cost, making the social cost higher.

If a Good Has an External Cost, Then the Marginal