Economics 0455 · IGCSE · Market failure

Market failure — practice question

A bridge is constructed across a river, and this shortens journey times. The table sets out the costs and benefits of constructing the bridge. private benefit = $12000$, private cost = $10000$, external benefit = $8000$, external cost = $5000$. Which calculation shows social benefit?

  • A$12000 - 10000 = 2000$
  • B$8000 - 5000 = 3000$
  • C$12000 + 5000 = 17000$
  • D$8000 + 12000 = 20000$

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