An example of a situation in which the social costs are greater than the private costs would be

Question

Quizplus · Accepted Answer

Social costs include both the private costs incurred by firms and also external costs that are not paid by the firm. In option D, the noise pollution from the airport affects the physician's ability to perform examinations, which is an external cost not borne by the airport but affecting the healthcare service. This is an example where social costs (including the external costs of noise pollution) are greater than the private costs (the operational costs of the airport).

An Example of a Situation in Which the Social Costs