Consider leaf burning that generates negative externalities. The private cost is
A) less than the external cost
B) greater than social benefit
C) understated by the amount of the social cost
D) less than the social cost
E) shared with third parties

Question

Quizplus · Accepted Answer

The social cost includes both the private cost and the external cost. When an activity generates negative externalities, such as pollution from leaf burning, the social cost of that activity is higher than the private cost incurred by the individual or entity performing the activity. This is because the external costs, such as health issues or environmental damage, are borne by society at large, not just by the individual or entity causing the pollution.

Consider Leaf Burning That Generates Negative Externalities