A report from Cycling England has suggested that a £70m investment in cycling each year could save the government £520m per year. The savings result from the positive benefits of increased cycling – lower carbon dioxide emissions and lower NHS costs as we become healthier. But, do the numbers add up?
Investment in cycling could save £520m, government told Guardian (17/9/07)
|1.||Define the terms (i) external benefits (ii) external costs and (iii) marginal social benefit.|
|2.||Identify three external benefits that result from increased cycling.|
|3.||Using diagrams as appropriate, show how the market equilibrium and the socially optimum level of cycling will differ.|
|4.||Discuss policies that the government could adopt to move the market closer to the social optimum.|