The difference between private cost and social cost is that
A) social cost only considers the external cost borne by society.
B) social cost only considers the cost borne by people other than the producer.
C) private cost only considers the cost borne by producers of the good.
D) social cost also includes any external benefit whereas private cost excludes all external benefits.
E) there is no difference; the terms refer to the same cost.

Question

Quizplus · Accepted Answer

Private cost refers to the costs that are borne by the producer or the company producing a good or service. This includes costs like materials, labor, and other expenses directly related to the production process. Social cost, on the other hand, includes both the private cost and any external costs (or benefits) that occur as a result of the production or consumption of a good or service, affecting third parties who are not directly involved in the transaction.

The Difference Between Private Cost and Social Cost Is That