The government has enough money to fund only one of three proposals. It chooses river flood defences, which cost £18 million. The estimated benefits are £24 million for replacing school computers and £12 million for adding local bus routes.
What is the opportunity cost of the government's choice?
The £12 million of expected benefit from adding local bus routes
The £36 million of expected benefits from both other proposals
The £18 million spent on river flood defences
The £24 million of expected benefit from replacing school computers
76 exam-style questions on OCR GCSE Economics 3.5 Fiscal policy, covering 3.5.1 Government spending and revenue, 3.5.2 Budget balance, surplus and deficit, 3.5.3 What is fiscal policy, 3.5.4 Calculate effects of taxes and spending, 3.5.5 Analyse effects of taxes and spending, 3.5.6 Costs and benefits of fiscal policy, and 3.5.7 Redistributing income and wealth. Each one has a worked solution and a mark scheme showing where the marks go.