What is a private cost of production? What is an external cost of production? What is a social cost of production? When is the private cost of production equal to the social cost of production?
What will be an ideal response?
A private cost of production is the cost borne by the producer of a good or service. An external cost of production is the value of a negative externality borne by those who do not produce the good or service. A social cost of production is the full cost of producing a good or service, including the producer's private cost and all the external costs. The private cost is equal to the social cost when no externalities exist.
You might also like to view...
How do advertising and other selling costs affect a firm?
A) They shift the marginal cost curve upward. B) The only effect is that the excess capacity is reduced. C) The only effect is that the demand for the product increases. D) They shift the average total cost curve upward. E) The do not change demand and shift the average total cost curve downward.
A market with only two firms is called a
A) duopoly. B) two-firm monopolistic competition. C) two-firm monopoly. D) cartel. E) two-firm quasi monopoly.