OCR A2 Economics Congestion

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'Congestion refers to a situation whereby journey times are longer than expected'

It occurs when another car enters a road and holds up/slows down all other cars

This imposes an external cost on other motorists

External costs of congestion:

  • Time (work time and lesuire time) Oppurtunity cost
  • Depreciation
  • Fuel wasted

Why Road Congestion is a Market Failure: 

  • Free market equilibirum is where MPC=MSB
  • Here there are too many cars using the road
  • The car owners ignore the negative externality
  • Over consumption
  • Optiumum is where MSC = MSB
  • Past Q optimum social costs exceed social benefit
  • Allocative inefficiency
  • The cost/price of the road is too low

Economists have calculated that the cost of congestion on UK roads is £25billion per year. How would they arrive at this figure? 

  • Congestion occurs when a driver's journey time is beyond their expectations
  • It is caused by too many vehicles on the road
  • Economists…


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