To take into account the full marginal cost of producing paper, we must look at the social marginal rate of
A) substitution
B) transformation
C) technical substitution

Question

Quizplus · Accepted Answer

The full marginal cost of producing paper includes not only the direct costs, but also the social costs associated with the transformation of natural resources into paper. This includes the environmental impacts, such as deforestation and pollution. Therefore, we must look at the social marginal rate of transformation, which takes these external costs into account. Choices A and C are not relevant in this context.

To Take into Account the Full Marginal Cost of Producing