Which of the following statements is correct?
A) Private benefit equals external benefit minus social benefit.
B) External cost minus private cost equals social cost.
C) Private benefit plus external benefit equals social benefit.
D) Private cost equals external cost.

Question

Quizplus · Accepted Answer

Social benefit is the total benefit to society, which includes both the private benefit (the benefit received by the consumer of a good or service) and the external benefit (the benefit received by others who are not directly involved in the transaction). Therefore, the correct statement is that private benefit plus external benefit equals social benefit.

Which of the Following Statements Is Correct