Question
In the Pigouvian approach, the marginal external costs of producing a good equal _________________.
The additional external cost incurred by non-market participants for each additional unit of the good.
The marginal social costs of producing the good minus the marginal private costs.
The total external costs incurred by non-market participants as a result of the negative externality.
The marginal social benefits of producing the good minus the marginal social costs.
The additional external cost incurred by non-market participants for each additional unit of the good.
The marginal social costs of producing the good minus the marginal private costs.
The total external costs incurred by non-market participants as a result of the negative externality.
The marginal social benefits of producing the good minus the marginal social costs.
Answers
GPT-4o mini
In the Pigouvian approach, the marginal external costs of producing a good equal **the marginal social costs of producing the good minus the marginal private costs.**
This is because marginal external costs represent the additional costs incurred by non-market participants that are not reflected in the market price of the good, thus distinguishing them from private costs.
This is because marginal external costs represent the additional costs incurred by non-market participants that are not reflected in the market price of the good, thus distinguishing them from private costs.