By adding internal costs to external costs, we determine the total

Question

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By adding internal costs (which are the private costs) to external costs (which are the costs imposed on society), we determine the social cost. This represents the total cost of an economic activity to both the individual and society as a whole. Choice A (private cost) only represents the costs incurred by the individual or firm conducting the economic activity, while Choice C (psychological cost) refers to the emotional or mental costs associated with a decision or action. Choice D (marginal cost) is the additional cost incurred by producing one more unit of a product or service.

By Adding Internal Costs to External Costs, We Determine the Total