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Ding DON and SackDON (THE DON SQUAD) (TMT) (NANBROS)

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Ding DON and SackDON (THE DON SQUAD) (TMT) (NANBROS)

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Q12) Assess how useful a cost-benefit analysis (CBA) would be in helping to decide whether a project, such as a high-speed train line, should go ahead.

Define cost-benefit analysis

high externality costs - increase in congestion/traffic

noise pollution/general pollution

increase in productivity - however could be different for local residents, due to increased disruption from the new high-speed train.

creation of jobs during the construction process

@ me

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Question 11:

Define investment

Short Run

Disruption could increase costs as it takes longer to move people and goods, leading to a fall in productivity and an increase in prices

Fall in house prices for people who live near the line but not had their houses demolished (bad for the labour market as morale is lowered).

Long Run

Increase in wages (as there are fewer unemployed workers, so economy closer to PPF)

Reduces the cost of goods and services which use the railway, shifting supply to the right so lowering the price.

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Q11) Short-run Good: employment, economic growth (multiplied with AD), attracts FDI.

Short-run Bad: People lose their homes, noise for construction, wildlife destroyed, destruction of habitats therefore ecotourism is decreased. People who live near to construction lose sleep therefore lose productivity at work.

Long-run Good: Better connection therefore better productivity as those travelling by train take less time to reach work, and don't have to waste time on the train not working. Larger maximum capacity, therefore NAIRU is reached at a later stage. Encourages investment into connecting cities, creating more than one national or international business hubs. Employment remains after construction with maintenance and running labour required. More mobile devices and comfort devices will be purchased as HS2 gains an increase in demand.

Long-run Bad: Disruption to surrounding cities that are not connected, thereby limiting growth of other cities as HS2 connected cities grow much faster. Noise for surrounding labour during the nights, therefore their productivity decreases as their sleep is disturbed. Less ecotourism as certain landscapes are destroyed and the aesthetic qualities of certain areas are damaged.

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Q12) Assess how useful a cost-benefit analysis would be in helping to decide whether a project, such as a high-speed train line, should go ahead.

Define cost-benefit analysis.

arguments for/against the use of cost-benefit analysis

high externality costs - increase in congestion/traffic

noise pollution/general pollution

increase in productivity - however could be different for local residents, due to increased disruption from the new high-speed train.

creation of jobs during the construction process

final judgement either for or against cost-benefit analysis being used to decide whether this project should go ahead.

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Q11. EXPLAIN THE LIKELY SHORT RUN AND LONG RUN EFFECTS OF INVESTMENT IN INFRASTRUCTURE PROJECTS SUCH AS HS2 ON BOTH LABOUR AND PRODUCT MARKETS IN THE UK. (15 MARKS)

NO

environmental concerns

disruption, congestion and noise to those around

costs £42.6 billion

high externality costs

CBA might not be accurate on a large scale project like this

YES

jobs are created to build and maintain it

multiplier effect

increases productivity

CBA is a decisive and objective way to decide on a project

Q12. ASSESS HOW USEFUL A COST-BENEFIT ANALYSIS (CBA) WOULD BE IN HELPING TO DECIDE WHETHER A PROJECT, SUCH AS A HIGH SPEED TRAIN LINE, SHOULD GO AHEAD. (25 MARKS)

NO

CBA might not be accurate on a large scale project

Costs and benefits vary over time and are never 'stable'

YES

CBA is a decisive and objective way to decide on a project

Easy to use figures comparatively

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Define Cost Benefit -  process by which business decisions are analyzed. The benefits of a given situation or business-related action are summed and then the costs associated with taking that action are subtracted.

For Cost Benefit

objective number easy to compare the numbers for , for and against the investment

forces you to plan and think about the investment

the outcome will be very simple for you to understand

Against

hard to work out

lack of concern of accuracy in complex measurements

costs and benefits change overtime making it hard to work out

subjective process to get a objective result, the value of some things may change over time

manipulation in the choosing of costs/benefits included and the means of valuing them

not making a distinction between the different individuals/ groups of stakeholders.

CONCLUSION

it is a waste of time

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Ding DON and SackDON (THE DON SQUAD) (TMT) (NANBROS) 

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Ding DON and SackDON (THE DON SQUAD) (TMT) (NANBROS) 

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Q11. Explain the likely short-run and long-run effects of investment in infrastructure projects such as HS2 on both labour and product markets in the UK. [15 marks]

Investment- In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.

Short term-

Increase in construction jobs

Fall in unemployment

Increase in demand for materials used to build the infrastructure

Long term-

Increase productivity

Increased demand for train drivers

Increase in LRAS

Lower costs for businesses who travel a lot