alleryStart learning →Social costs are described as the private costs of production plus:
AExternal costs of pollution
BInternal costs of labor
CFixed costs of the plant
DMarginal costs of capital
Answer & Solution
Correct answer: A. External costs of pollution
1. Social cost is broader than what the firm itself pays.
2. The social costs include the private costs of production that a company incurs.
3. They also include the external costs of pollution.
4. Those external costs pass on to society.
_Source: OpenStax Principles of Microeconomics for AP Courses 2e (CC BY 4.0), Ch 12 'Environmental Protection and Negative Externalities'_
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