A local authority plans to build a new light rail transit link to connect a residential suburb with the city centre. The table below shows estimated costs and benefits of two planned routes for the light rail link.
| 'North Line' (£ million) | 'South Line' (£ million) | |
|---|---|---|
| Private costs | 30 | 45 |
| Private benefits | 50 | 70 |
| External costs | 12 | 15 |
| External benefits | 18 | 33 |
The local authority intends to choose the route that has the higher ratio of social benefits to social costs. This ratio (correct to one decimal place) is
1.5:1
1.6:1
1.7:1
1.8:1
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.