Congestion
Question 1
Road traffic congestion has become an increasingly important issue in
recent years. The only way to completely eliminate congestion would be a
complete ban on road traffic, but this would not be a socially efficient
solution.
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Why are people driving more?
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Why is road congestion and example of market failure?
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What are the private and external costs of congestion?
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Evaluate three alternative remedies for road congestion.
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Should the London congestion charge be applied to other UK cities?
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Why would a complete ban on road traffic be socially inefficient?
Question 2
The price mechanism works to allocate scarce resources in three main ways: to ration scarce resources; to send a signal to consumers and producers and; to provide incentives to reward certain kinds of behaviour and penalise other types.
Using these three concepts explain how road pricing works to reduce traffic congestion.