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The economic problem

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Question 27

A regional government has been allocated a fixed infrastructure fund of £50 million. Due to scarcity, it must choose only one of four mutually exclusive development proposals. The estimated economic welfare benefits of each proposal are evaluated as follows:

  • Proposal A (High-speed rail link): £65 million
  • Proposal B (Hospital expansion): £85 million
  • Proposal C (Flood defense network): £92 million
  • Proposal D (Science and technology park): £78 million

If the regional government decides to implement the flood defense network (Proposal C), what is the opportunity cost of this decision?

A

£50 million

B

£85 million

C

£92 million

D

£228 million

Markscheme

The economic problem Questions

  1. A Level
  2. /Economics
  3. /The economic problem

53 exam-style questions on OCR A Level Economics The economic problem. Each one has a worked solution and a mark scheme showing where the marks go.

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