If good A is a normal good and income increases, the equilibrium ...

[rl]

If good A is a normal good and income increases, the equilibrium price of A ________ and the equilibrium quantity of A ________.
 
  A) rises; increases
  B) rises; decreases
  C) falls; decreases
  D) falls; increases

Question 2

Discuss the difference between a private cost and a social cost.
 
  What will be an ideal response?

[jaymee143]

Answer to Question 1

A

Answer to Question 2

A private cost is the cost of producing a good or service that is borne by the producers. In certain instances, however, some of the costs of production are borne by someone other than the producer. This cost is called an external cost. The social cost is the total cost borne by all of society. Thus the social cost equals the private cost, the costs borne by the producers, plus the external cost, the costs borne by everyone else.