One way to allocate scarce landing slots at a congested international airport during peak hours would be to charge airlines a high premium fee to use them.
One reason why this policy is likely to result in a more efficient allocation of resources is because
incentives to build new runways would be higher.
only luxury airlines would choose to use the landing slots.
landing slots would be rationed to flights that value them the most.
the airport authorities would raise a large amount of revenue from airlines.
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.