Question

Social cost refers to ______.

Options

• explicit cost and implicit cost

• accounting cost

• private cost + real cost

• private cost + external cost

Answer 1

Social cost refers to private cost + external cost.

Explanation:

A good or service's entire cost to society as a result of its creation or use is referred to as its "social cost." It consists of: 

• Private cost: The price paid by the manufacturer or buyer.
• External cost: Expenses incurred by others, such as traffic jams, pollution, etc.