Exam questions (June 2007)

1. a) Explain the likely effects of an increase in demand in an oligopolistic market.
Discuss the impact of deregulation on the structure of the air passenger
transport industry (15)

2. a) Explain how the environmental costs associated with transport use result in a
misallocation of resources. (10)
Discuss the contribution that estimating such environmental costs can make
towards correcting the market failure associated with increased transport use. (15)

3. a) Explain the economic benefits of constructing new and improved motorways and
trunk roads. (10)
Discuss whether forecasts of demand for road traffic on their own should be the
basis for making decisions on road construction. (15)

Answers/Marking guidelines here

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