Which of the following statements is correct?

Question

Quizplus · Accepted Answer

Marginal social cost consists of the marginal private cost incurred by the producers of a good or service, as well as any incidental costs borne by third parties. Therefore, statement C is correct. Statement A is incorrect because marginal social cost includes all costs, not just those paid for by the persons carrying out the activity. Statement B is incorrect because marginal private cost refers to the cost borne by the producer, not by third parties. Statement D is incorrect because incidental costs are separate from marginal private cost, although they are both components of marginal social cost.

Which of the Following Statements Is Correct