The total costs to a society of an economic activity are called

• A. Private Costs
• B. External Costs
• C. Social Costs
• D. Public Costs

Answer: (C)

Social costs are the total costs to society of an economic activity. This includes the private costs faced by the producer (wages, materials, capital, etc.) and the external costs imposed on others (pollution, health impacts, congestion, etc.). By adding private and external costs, you get the full burden on society, not just what the firm pays. Private costs describe only the producer’s expenses, external costs describe costs to third parties, and public costs isn’t the standard term for the total societal cost in this context.