How are the total social costs of production defined?
A) private costs plus private benefits
B) private benefits minus private costs
C) private costs plus external costs
D) private costs minus external costs

Question

Quizplus · Accepted Answer

The total social costs of production are defined as the sum of private costs and external costs. Private costs are the costs borne by the producer and external costs are the costs borne by society as a whole, such as pollution, congestion, and other negative effects on the environment and public health. Taking into account external costs is important to ensure that the true costs of production are reflected and that resources are allocated efficiently.

How Are the Total Social Costs of Production Defined