O-LevelEconomicsThe allocation of resources2281/12 · May/June 2019 · Q51 Mark
An airline upgrades its services by providing bigger aircraft. The airline claims it will reduce catering waste and lower carbon (CO2) emissions per passenger journey although fares may rise. What is a private cost and an external benefit of this decision?
Aprivate cost: bigger aircraft, external benefit: higher fares
Bprivate cost: higher fares, external benefit: lower CO2
Cprivate cost: less catering waste, external benefit: bigger aircraft
Dprivate cost: lower CO2, external benefit: less catering waste
✓ Correct answer
B: private cost: higher fares, external benefit: lower CO2
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