A bridge is built over a river which enables journey times to be reduced.
The table shows costs and benefits of building the bridge.
Which calculation represents social benefit?
$ 12000-$ 10000=$ 2000
$ 8000-$ 5000=$ 3000
$ 12000+$ 5000=$ 17000
$ 8000+$ 12000=$ 20000
Why does a government provide certain goods and services in a mixed economic system?
The government always provides goods more cheaply than private firms.
The government considers only private costs and private benefits.
The government provides goods to prevent the development of monopolies.
The government provides public goods because private firms cannot charge for them.
A monopolist uses oil in its production process that causes pollution. The monopolist is efficient at producing large quantities of its product which is sold at a very low price.
What is the likely cause of market failure?
abuse of monopoly power
demerit goods
diseconomies of scale
external costs of production