Social Costs of a Good Are Equal to

question 129

Multiple Choice

Social costs of a good are equal to

• A) external costs minus private costs.
• B) private costs minus external costs.
• C) private costs plus external costs.
• D) external costs divided by the private costs.

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Definitions:

Shut Down

A short-term decision by a firm to cease operations because current operation is not covering variable costs.

Firm

An organization that produces goods or provides services, usually with the aim of making a profit.

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.

Minimum Return

The lowest expected or required return on an investment over a specified period.