Cost Benefit Analysis for New Airport

Discuss the difficulties of using Cost Benefit Analysis in deciding whether to build a new international airport.

A Cost-Benefit analysis involves examining whether society will benefit from building a new airport. Therefore, the government need to calculate all the social costs and social benefits. This includes calculating private costs and external costs, as well as all the private benefits and external benefits.

Difficulties include

1. Placing a monetary value on external costs and external benefits

For example, an external cost of a new airport is increased pollution from more flights. However, the exact cost is difficult to measure because we are uncertain about the implications of global warming. The new airport may also involve building on greenbelt land. This means that local wildlife will suffer. The importance of local wildlife and the environment is very subjective. e.g. if you asked a questionnaire, people would give very different answers.

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Should we increase tax on cars?

Readers Question: over the next 10 years, should the government make greater or lesser use of measures such as road pricing or taxes on fuel to reduce road use? In the UK, road use creates many external costs. This includes increased pollution, congestion, and accidents. Therefore, the social cost of driving is greater than the …

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Funny Typos in Interview Letters

“I have a graduate degree in unclear physics.” (I never understood physics either) “I worked for 6 years as an uninformed security guard.” (ignorance is bliss) “My last role was a plumbing and hating specialists.” • “The academic scholarship I earned came with a plague.” (the cost of university is really too high these days) …

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Why House Prices in the UK are Falling 2008

The state of the UK housing market seems to get as much coverage in the newspapers as just about every topic, bar the latest escapades of Britney Spears driving through a traffic light. From inches of press coverage, it appears that a fall in the rate of UK house price inflation is vastly more significant …

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How Much Would You Pay for Cigarettes – $222?

When we buy a packet of cigarettes for $8, we may think that this is the personal cost. But, a new study claims the real personal and social cost of smoking a pack of cigarettes is closer to $200. pdf of report – Report by Kip Viscusi and Joni Hersch To arrive at these statistics …

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Recession In US and Euro Zone

How would a recession in the US and EU affect the UK economy?

Over 75% of UK trade is with the US and EU. Therefore, a recession in these countries would have a significant impact.

Firstly, UK exports to these countries would fall. Therefore, the UK is likely to have a fall in AD, (or at least lower growth)
Therefore, the UK would experience a lower rate of economic growth. The impact of this fall in exports will depend upon several other factors. The impact will depend upon other factors affecting UK domestic demand. For example, if UK house prices continued to rise and consumer spending remained buoyant, then the UK would be able to avoid an economics downturn.

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Interest Rates to Fall in 2008

Yesterday, the Bank of England kept interest rates constant at 5.75% for the fourth consecutive month. However, it looks increasingly likely that the base rate will fall in 2008, possibly to 5%. Every three months the Bank publish an inflation report, which is a forecast for inflation over the next couple of years. Despite recent …

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Preparing for Economics Interview at Oxford

Readers Question: what do I need for an interview of “Economics and Management” course or PPE course in Oxford ?

I have written one article here with some general advice for preparing for an interview at Oxford

For Economics and Managemanent or PPE. I would suggest the additional pieces of information

1. Read Outside Syllabus

Make sure you have read, at least, a couple of economics books which go beyond the A Level syllabus. This might be the popular Freakonomics, or something by Paul Krugman . There is no guarantee that they will ask you about what you have been reading. But, If you can’t point to any outside reading it will look bad.

2. Be Confident to Express Opinions.

If you were asked should the UK join the EURO, make sure you would be able to offer some convincing arguments one way or the other. At the same time, try to give the impression, you are aware things are not black and white.

3. Practise Speaking / arrange an interview with someone.

In an interview you want to:

  • Avoid excessive hesitation
  • Answer the questions they ask
  • Be confident but not arrogant.
  • Appear interested in the topic
  • Look well presented

Don’t worry about being a bit nervous, but, it makes a big difference to have a mock interview, making it as realistic as possible.

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