Domestic short-haul aviation in the UK has faced scrutiny as high-speed rail links offer a lower-carbon alternative. However, due to fuel tax exemptions on aviation fuel and high track-access charges for train operators, airfares are frequently priced below the equivalent rail journey. This price disparity distorts consumer choice, resulting in a misallocation of resources where too many passengers choose short-haul flights instead of rail travel.
Source: Academic research into UK transport policy
With the help of an appropriate diagram, explain why 'too many passengers choose short-haul flights instead of rail travel' (Extract G).
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.