A government uses a cost-benefit analysis approach to infrastructure projects. It is considering building a new railway to link a city centre to its airport. It estimates the following. What should the government decide and why?
A.
B.
C.
D.
Exam No：9708_w21_qp_32 Year：2021 Question No：3
Answer:
D
Knowledge points:
7.4.1 definition and calculation of social costs (SC) as the sum of private costs (PC) and external costs (EC), including marginal social costs (MSC), marginal private costs (MPC) and marginal external costs (MEC)
7.4.2 definition and calculation of social benefits (SB) as the sum of private benefits (PB) and external benefits (EB), including marginal social benefits (MSB), marginal private benefits (MPB) and marginal external benefits (MEB)
7.4.7 use of costs and benefits in analysing decisions (knowledge of net present value is not required)
Solution:
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