A-LevelEconomicsThe price system and the microeconomy9708/12 · Oct/Nov 2011 · Q161 Mark
A government admits that building a new bridge would produce a positive net benefit to society. Owing to a lack of public funds, the bridge would have to be built and operated by a private company, that would charge the public to use the bridge. Private companies insist that building the bridge would not be profitable. What could explain the companies' unwillingness to build the bridge?
Aprivate company will be unable to obtain the consumer surplus of the users.
BBuilding the bridge will give rise to negative externalities.
CThe demand for bridge crossings is price-inelastic.
DThe potential benefits are non-excludable.
✓ Correct answer
A: private company will be unable to obtain the consumer surplus of the users.
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