Economics (AS & A Level) · May / June 2022 · Paper 31 · Question 3
9708Private costs and benefits, externalities and social costs and benefits
The private benefit of an activity is greater than the private cost. The social benefit of the same activity is less than the social cost. What must be true of the activity?
- Aexternal benefit = external cost
- Bexternal benefit > external cost
- Cexternal benefit < external cost
- Dexternal benefit > private benefit
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Correct answer: C. external benefit < external cost
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