In Swaziland, a small African country, six in ten people live in poverty and most firms are small, using very little capital equipment. A new airport was opened in October 2015. Some economists argue that constructing the airport had a high opportunity cost and brought several external costs. Building the airport is one element of the government’s programme to transform the country from developing into developed.
(a)[2]
What could be the opportunity cost of building an airport?
(b)[4]
Explain two reasons why a government would wish to change its country from developing into developed.
(c)[6]
Analyse the external costs that may result from airport construction and expansion.
(d)[8]
Discuss whether people would prefer to buy a product from a small firm or from a large firm.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Opportunity cost means the next best alternative given up” …