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

Question

Business

Giancarlo Hurst

1 June, 03:48

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

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Answers (2)

Know the Answer?

Izaiah Simmons · Answer 1

increase the social cost on top of the private cost

Buffalo · Answer 2

Answer: increases the social cost above the private cost

Explanation:

An external cost occurs when the production or consumption of a good or service imposes a cost i. e a negative effect upon a third party who isn't involved in the consumption or production decision.

The increase in the travel time of other drivers on the highway which is caused by Monique's decision is an external cost. If there are external costs in the consumption of a good, it is refered to as negative externalities and the social costs will be higher than the private cost.