A city’s transport authority is thinking about constructing an underground railway to ease road congestion. Which pair would show one external cost and one external benefit from using this railway?
- Aexternal cost: compensation is paid to businesses displaced by construction work; external benefit: foreign tourists pay to use the railway
- Bexternal cost: nearby residents suffer noise from passing trains; external benefit: there are fewer admissions to hospital as air quality improves
- Cexternal cost: overtime payments are made to workers to finish building the railway on time; external benefit: productivity increases as employees arrive at work more punctually
- Dexternal cost: reduced traffic means there are fewer road improvements needed; external benefit: motorists spend less on fuel