Questions: Marginal private cost equals the marginal social cost only if the marginal external cost is positive. the cost of producing an additional unit of a good or service that falls on people other than the producer of that good or service. is the cost of producing an additional unit of a good or service that is paid by the producer of that good or service. is always zero if there is an external cost. the cost of producing an additional unit of a good or service that is paid by the entire society.

Marginal private cost equals the marginal social cost only if the marginal external cost is positive. the cost of producing an additional unit of a good or service that falls on people other than the producer of that good or service. is the cost of producing an additional unit of a good or service that is paid by the producer of that good or service. is always zero if there is an external cost. the cost of producing an additional unit of a good or service that is paid by the entire society.

Transcript text: Marginal private cost equals the marginal social cost only if the marginal external cost is positive. the cost of producing an additional unit of a good or service that falls on people other than the producer of that good or service. is the cost of producing an additional unit of a good or service that is paid by the producer of that good or service. is always zero if there is an external cost. the cost of producing an additional unit of a good or service that is paid by the entire society.

Solution

Answer

The answer is: the cost of producing an additional unit of a good or service that is paid by the producer of that good or service.

Explanation

Option 1: Equals the marginal social cost only if the marginal external cost is positive.

This statement is incorrect. The marginal private cost equals the marginal social cost when there are no external costs or benefits. If the marginal external cost is positive, the marginal social cost would be higher than the marginal private cost.

Option 2: The cost of producing an additional unit of a good or service that falls on people other than the producer of that good or service.

This describes the marginal external cost, not the marginal private cost. Marginal private cost is borne by the producer, while external costs affect others.

Option 3: Is the cost of producing an additional unit of a good or service that is paid by the producer of that good or service.

This is the correct definition of marginal private cost. It refers to the cost incurred by the producer for producing one more unit of a good or service.

Option 4: Is always zero if there is an external cost.

This statement is incorrect. The presence of an external cost does not make the marginal private cost zero. The marginal private cost is independent of external costs.

Option 5: The cost of producing an additional unit of a good or service that is paid by the entire society.

This describes the marginal social cost, which includes both the private cost and any external costs. It is not the definition of marginal private cost.

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