Which equation is TRUE?
A) private cost + average cost = social cost
B) social cost = private cost + external cost
C) external cost = private cost
D) private cost + social cost = external cost

Question

Quizplus · Accepted Answer

The equation "social cost = private cost + external cost" is true. This is because social cost takes into account not only the private cost borne by the producer but also the external costs imposed on society as a whole. By adding the external costs to the private costs, we can get a more accurate picture of the total cost of production to society.

Which Equation Is TRUE