Asked by Kailyn Holmes on Jul 24, 2024
Verified
Relating to the Economics in Practice on page 330: If a company that is responsible for an environmental disaster does not end up paying the entire cost of the damage it created, the marginal social cost will be ________ the sum of the marginal costs of production.
A) less than
B) greater than
C) equal to
D) unrelated to
Marginal Social Cost
The total cost to society of producing one additional unit of a good or service, considering both the direct costs and any externalities.
Environmental Disaster
A catastrophic event that significantly harms the natural environment and leads to negative impacts on human health and well-being.
- Determine the differences in expenses and benefits from individual, public, and marginal viewpoints.
Verified Answer
QN
Queen NatalieJul 28, 2024
Final Answer :
B
Explanation :
When a company responsible for an environmental disaster does not pay the entire cost of the damage, the marginal social cost includes both the marginal costs of production and the unaccounted-for environmental damage costs. This makes the marginal social cost greater than just the sum of the marginal costs of production.
Learning Objectives
- Determine the differences in expenses and benefits from individual, public, and marginal viewpoints.