Active traffic management and congestion charging schemes are designed to ensure that drivers internalise the full impact of their journeys. When commuters choose to drive into a busy city centre, they rarely consider the wider consequences of their journey on other road users and local residents. Economists argue that without government intervention, the free market fails because motorists only pay their private costs, completely ignoring the wider social cost (line 8) of increased pollution, delays, and accidents.
Source: academic research
Define the term ‘social cost’ (Extract D, line 8).
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.