Chapter 14R, Problem 21MCQ

To determine

The correct for $10 which is part of the smartphones.

Answer to Problem 21MCQ

From the available options, the correct option is marginal external cost and marginal social cost.

Explanation of Solution

Marginal private cost is a cost that is changed with the production of the additional unit and it is incurred by producers. Marginal social cost is bear by the whole society or third party whether they produce/ consume that commodity or not when one additional unit of the good is produced. And, Marginal external cost is incurred by the third party who does not produce/buy or sell that good.

Therefore, marginal external cost and marginal social cost are the perfect combinations that impose the cost of pollution on people who are not related to the sale or purchase of the commodity.

It means all options: a, b, d, and e are incorrect.

Therefore, the correct option is c (marginal external cost and marginal social cost).

Economics Concept Introduction

Introduction: The marginal social cost is the cost which is incurred by the whole society as well as the individual by producing an extra unit of a product. And, the marginal external cost (MEC) is the cost that is changed to other parties than the producer or buyer of the good when an additional unit is produced.