The social cost of production is
A) the private cost of production plus the external cost generated by production.
B) the external cost generated by production.
C) the private cost of production that is greater than the benefit of production.
D) the external cost of production that is greater than the benefit of production.

Question

Quizplus · Accepted Answer

The social cost of production is the total cost to society of producing a good or service, which includes both the private cost of production (costs borne by producers) plus any external costs generated by production (costs borne by society as a whole). Option A includes both private and external costs, making it the best choice. Option B only includes external costs and does not capture the full social cost of production. Options C and D focus on costs that are greater than the benefits, rather than the total cost to society.

The Social Cost of Production Is