The table below shows some hypothetical data on the costs associated with the us

Question

The table below shows some hypothetical data on the costs associated with the use of a liter of gasoline in a European country. Refining, distributing, and selling of gasoline all take place within this European country.

1. In euros, what is the private cost for an individual of a liter of gasoline in Europe (Ex: If your answer is 3.25 Euros then enter 3.25)?

2. What is the social cost, in euros, of a liter of gasoline?

cost of import oil .5 cost to refine the oil to gasoline 1 cost to distribute and sales .75 GOV taxes on the oil 2.5 cost of pollution from one liter of gas 2

Explanation / Answer

1. Private cost is a supplier's or producer's cost of providing goods and services without any external cost.

That is Private cost = 0.50+ 1 + 0.75 + 2.50 = 4.75.

2. Social cost is private cost plus external cost.

Here social cost = 0.50 + 1 + 0.75 + 2.50 + 2 = 6.75.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.