Economics 0455 · IGCSE · Market failure

Market failure — practice question

Developers plan to enlarge a major city retail shopping district. It is believed that the scheme would generate hundreds of jobs, be profitable for the shops, but lead to severe traffic congestion. Which economic concepts are directly involved in this statement?

  • Aexternal cost and private benefit
  • Bincome distribution and inelastic demand
  • Cprivate investment and a decrease in supply
  • Dsocial benefit and perfect competition

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