If a product has zero external costs then A marginal social

If a product has zero external? costs, then

A.

marginal social cost equals zero.

B.

marginal social cost equals marginal private cost.

C.

marginal social cost is less than marginal private cost.

D.

marginal social cost is greater than marginal private cost.

E.

we need more information to determine the relationship between marginal private cost and marginal social cost.

Solution

Ans:

Option B

marginal social cost equals marginal private cost.

If a product has zero external cost, it means marginal social cost equals marginal private cost.