Economics · May / June 2017 · Paper 11 · Question 7

A project to build one of the world's biggest coal mines was planned in Australia. The project was estimated to cost $US12.5 million. It would create employment but threaten endangered species as large coal ships would damage the Great Barrier Reef. What effects would this project have on the following costs and benefits?

1. Aprivate cost decrease; private benefit uncertain; external cost uncertain
2. Bprivate cost increase; private benefit decrease; external cost increase
3. Cprivate cost increase; private benefit increase; external cost increase
4. Dprivate cost uncertain; private benefit increase; external cost increase

As printed in the paper