Asked by Keilan Harris on Apr 27, 2024
Verified
When Monique drives to work every morning, she drives on a congested highway. What Monique does not realize is that when she enters the highway each morning she increases the travel time of all other drivers on the highway. In this case, the external cost of Monique's highway trip
A) increases the social cost above the private cost.
B) lowers the social cost below the private cost.
C) increases the social value above the private benefit.
D) decreases the social value below the private benefit.
External Cost
A cost that is not borne by the parties to an economic transaction, often affecting third parties who did not choose to incur that cost.
Social Cost
The total cost to society as a whole due to an activity or decision, including both direct costs and indirect externalities.
Congested Highway
A highway or roadway that experiences traffic congestion due to a high volume of vehicles, often leading to slower speeds and longer travel times.
- Evaluate the effects of positive and negative externalities on the financial and social benefits and costs.
Verified Answer
JS
Jackson SchenkApr 28, 2024
Final Answer :
A
Explanation :
Monique's action of driving on a congested highway imposes additional travel time on other drivers, which is an external cost not borne by her but by other drivers. This increases the total social cost of her trip beyond her own private costs, such as fuel and time, making choice A correct.
Learning Objectives
- Evaluate the effects of positive and negative externalities on the financial and social benefits and costs.