If the marginal private cost of producing one kilowatt of power in California is ten cents and the marginal social cost of each kilowatt is fourteen cents,then the marginal external cost equals ________ per kilowatt.
A) ten cents
B) nineteen cents
C) four cents
D) zero cents
E) fourteen cents

Question

Quizplus · Accepted Answer

The marginal external cost of producing each kilowatt of power is the difference between the marginal social cost and the marginal private cost.

So,

Marginal external cost = Marginal social cost - Marginal private cost

Marginal external cost = 14 cents - 10 cents = 4 cents

Therefore, the answer is option C) four cents.

If the Marginal Private Cost of Producing One Kilowatt of Power