The government turned down a plan for a new power station on the grounds that it would not create social benefit. It worked out that private costs were $800 m, private benefits were $900 m and external benefits were $300 m. What had to be the case for the power station’s external costs?
- AExternal costs were equal to external benefits.
- BExternal costs were greater than $400 m.
- CExternal costs were less than external benefits.
- DThere were no external costs.