If the marginal social cost of producing a ton of cement is $4,000 and the marginal private cost is $3,500,then the
A) marginal benefit of a ton of cement will equal $4,000.
B) total cost of producing a ton of cement is $7,500.
C) marginal external cost of producing a ton of cement is $500.
D) marginal external cost of producing a ton of cement is $7,500.
E) marginal external cost of producing a ton of cement is $4,000.

Question

Quizplus · Accepted Answer

The marginal social cost of producing a ton of cement is $4,000, which includes both the private cost of $3,500 and an external cost of $500. Therefore, the marginal external cost of producing a ton of cement is $500 (C). The other answer choices are incorrect because the marginal benefit of a ton of cement cannot be determined from this information, the total cost of producing a ton of cement is not given, and the marginal external cost is $500, not $7,500 or $4,000.

If the Marginal Social Cost of Producing a Ton of Cement