2017 · Q42
Social cost is higher than economic cost because
Indian EconomyGrowth and sectors
- Asociety is bigger than economy
- Bsociety includes polity. While economy does not include it
- Ccost bome by bystanders is positive
- Dsociety includes both consumers and producers
Explanation
Social cost equals private (economic) cost plus external cost. It exceeds economic cost precisely when bystanders bear positive costs, such as pollution or congestion from a factory, which do not appear in the producer's accounts. The other options misstate the concept: size of society, polity, or consumers-plus-producers do not create the wedge. Hence C.