Question

Given below are two statements:
Statement (I): Exact monetary measurement of social cost is not possible.
Statement (II): Rate of increase in marginal cost is less than the average cost.
In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Statement (I) and Statement (II) are correct.
• B. Both Statement (I) and Statement (II) are incorrect.
• C. Statement (I) is correct but Statement (II) is incorrect.
• D. Statement (I) is incorrect but Statement (II) is correct.

Hint:

Externalities (such as pollution) cannot be easily measured in dollars, making Statement I correct.
The Marginal Cost (MC) curve is more sensitive to production changes and always rises faster than Average Cost (AC).

Answer 1

The Correct Option is C