The total cost of producing a good including private costs plus any costs imposed on society is called what?

• A. Social Cost
• B. Private Cost
• C. Social Benefit
• D. Externalities

Answer: (A)

The main idea is that social cost is the total cost to society from producing a good. It includes what the producer pays (private cost) plus any costs imposed on others (external costs). So social cost = private cost + external costs. That’s why it’s the best answer: it captures the full burden on society, not just the producer’s expenses.

For example, pollution from production adds health and clean-up costs for people and the environment, which are external costs. Private cost would miss these, while social cost includes them. Social benefit would be the opposite side (benefits to society), and externalities refer to the spillover effects themselves, not the total cost measure.