Which of the following statements is correct?
A. Marginal social cost is the share of marginal cost caused by an activity that is paid for by the persons who carry out the activity.
B. Marginal private cost is the share of marginal cost caused by an activity that is borne by persons other than those who carry out the activity.
C. Marginal social cost is the sum of marginal private cost and incidental cost.
D. Marginal private cost and incidental cost are one and the same.
Answer: C
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If India decides to enact environmental laws to reduce air pollution, what would be the effect on GDP?
A) GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls. B) GDP would increase as the environmental costs of pollution were not included in the calculation of GDP. C) GDP would increase as the citizens of India were made happier as the air pollution was reduced. D) GDP would increase reflecting the fact that the air would be cleaner.
Marginal revenue
A) cannot be used to determine the profit-maximizing rate of production. B) is the change in total revenues resulting from a change in output. C) is a change in revenue that is immeasurable and non-quantifiable. D) cannot be effectively utilized when analyzing the perfect competitor.