Economics 0455 · IGCSE · Market failure

Market failure — practice question

A government gave approval for a new railway line linking major cities to be built. A private company would construct it, while part of the cost would be met through taxation. The scheme would provide many jobs. People living along the route were concerned about damage to their environment. Which concepts are directly involved in this statement?

  • Aexcess demand and public corporation
  • Bgovernment subsidies and perfect competition
  • Cmarket system and income distribution
  • Dprivate benefit and external cost

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