Correct answer is C

Candidates typically do less well in questions requiring simple numerical comparisons than
they do in non-numerical questions. This proved to be the case with this question, with less
than 50 per cent of candidates answering it correctly. The required comparative numerical
calculations in this question are simple and the relative poor performance of the majority of
candidates suggests that the difficulty they experienced was due to inadequate
understanding of the concepts of social costs and benefits.
To determine which of the four projects adds most to the economic welfare of the whole
community, it is only necessary to add private benefits to positive externalities for each
project and subtract from this figure the sum of private costs and negative externalities. The
project yielding the largest net benefit is the one which maximises economic welfare. The
key is C; the project has a net benefit of 70 million, but this was selected by only 47.77 per
cent of candidates.
To work out the project that generates the best outcome, the following calculations must be
carried out:
(private benefits+positive externalities)-(private costs+negative externailties)
The formula has been carried out for each project and has generated the outcomes below.
A-180-140=40
B-180-120=60
C-110-40=70 This answer shows the project that maximises economic welfare.
D-250-260=-10