A regional environmental authority is evaluating two sustainable energy proposals: 'Project Canopy' (a biomass and afforestation initiative) and 'Project Solaria' (a community solar farm array). The table below details the estimated costs and benefits of both projects.
| Cost/Benefit category | Project Canopy (£ million) | Project Solaria (£ million) |
|---|---|---|
| Private costs | 50 | 80 |
| Private benefits | 65 | 110 |
| External costs | 14 | 22 |
| External benefits | 25 | 43 |
The authority intends to approve the project that yields the higher ratio of social benefits to social costs. This chosen ratio (correct to one decimal place) is
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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.