Economics 2281 · O Level · Market failure

Market failure — practice question

Developers plan to expand a large retail shopping district in a city. It is believed that the scheme would generate hundreds of jobs, make the shops profitable, but lead to severe traffic congestion. What 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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