The difference between social cost and private cost is a measure of theGroup of answer choicesloss in profit to the seller as the result of a negative externality.cost of an externality.cost reduction when the negative externality is eliminated.cost incurred by the government when it intervenes in the market.
Question
The difference between social cost and private cost is a measure of theGroup of answer choicesloss in profit to the seller as the result of a negative externality.cost of an externality.cost reduction when the negative externality is eliminated.cost incurred by the government when it intervenes in the market.
Solution
The difference between social cost and private cost is a measure of the cost of an externality.
Here's a step-by-step explanation:
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Private cost is the cost that is directly incurred by producers or consumers in the market. For producers, this includes costs like labor, materials, etc. For consumers, this is the price paid for goods or services.
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Social cost, on the other hand, includes not only these private costs, but also any additional costs (or externalities) that affect society as a whole. This could include things like pollution, traffic congestion, etc.
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Therefore, the difference between social cost and private cost is a measure of the cost of these externalities. This is because these are costs that affect society but are not directly accounted for in the market.
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