During peak morning hours, public electric vehicle (EV) rapid-charging hubs in a major metropolitan area experience severe congestion and long queues. To address this, the city transport authority introduces a steep peak-time surcharge for vehicles using these hubs between 07:00 and 09:30.
Which of the following explains why this pricing policy is likely to lead to a more efficient allocation of resources?
It provides a clear incentive for private energy firms to expand charging infrastructure in under-served rural areas.
It rations the scarce charging slots to motorists who place the highest economic value on charging their vehicles immediately.
It allows the transport authority to maximize its fiscal revenues from public charging fees.
It ensures that only high-income owners of premium luxury electric vehicles can access the charging hubs.
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.