CAIE A-Level Economics 7.4.1 Social costs

CAIE A-Level Economics 7.4.1 Social costs
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise calculating and interpreting social costs from private and external costs in market diagrams and real-world contexts.

How this is tested

  • calculate social cost as private cost plus external cost from project or market data
  • use a diagram to show MSC above MPC, lower output and higher price for steel

Question 10

[Maximum number: 1]

Some multinational oil companies extracting oil in developing countries are now required to repair the damage they do to the environment.

What best describes the total costs incurred by the oil companies in such circumstances?

A

external costs

B

private costs plus external costs

C

social costs plus external costs

D

social costs plus private costs