In September 2016 the government approved the building of an £18 billion nuclear power station, Hinkley Point C, which w

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In September 2016 The Government Approved The Building Of An 18 Billion Nuclear Power Station Hinkley Point C Which W 1 (58.44 KiB) Viewed 59 times

In September 2016 the government approved the building of an £18 billion nuclear power station, Hinkley Point C, which will supply 7% of UK electricity for up to 60 years. The power station is funded by Chinese and French investment. (a) Define externalities. Why are externalities a market failure? (5 marks) (b) Explain the private costs and external costs involved in such major power station construction projects. Use an appropriate externalities diagram in your answer. (10 marks) (c) Explain the private benefits and external benefits of this project. (5 marks) (d) The price elasticity of demand for electricity in the UK is estimated to be -0.35 in the short run and - 0.85 in the long run. Give possible reasons for the change in price elasticity of demand for electricity over time. (5 marks)