To find the social cost of an action, add together

Question

Quizplus · Accepted Answer

The social cost of an action includes both the private costs (internal costs) and the external costs. Internal costs are those directly incurred by the parties involved in the action, while external costs are costs that are imposed on third parties who are not involved in the action. Therefore, adding the external costs and the internal costs gives us the true social cost of an action. Accounting costs and private opportunity costs may be important factors to consider, but they are not included in the social cost calculation.

To Find the Social Cost of an Action, Add Together