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Economics (AS & A Level) · May / June 2025 · Paper 34 · Question 4

9708Private costs and benefits, externalities and social costs and benefits

A cost–benefit analysis is carried out on the construction of a hydroelectric power station. Under which circumstances would the scheme be most likely to be approved?

  1. APrivate benefits are greater than private costs.
  2. BSocial benefits are greater than social costs.
  3. CSocial benefits are greater than external costs.
  4. DExternal costs are greater than external benefits.

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Correct answer: B. Social benefits are greater than social costs.

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