Question 1: Reasons for government intervention The imposition of congestion charges on motorists is a form of government intervention intothe issue of traffic congestion on busy public roads. With reference to economic theorycovered in this course, why do you think the government needs to intervene in this issue?
Question 2: Public policy solutions (a) Perform an economic analysis of congestion charges as a public policy instrument. (Inyour answer, consider: what sort of public policy instrument is a congestion charge?How does it work in economic terms?) (b) What other public policy instruments can the government employ to combat trafficcongestion on busy public roads, and how do these differ from congestion charges?
Question 3: Efficiency of public policy solutions (a) Based on your analysis in Question 2 (a) above, how should congestion charges be setin order for congestion problems to be corrected in a way that maximises the overallwelfare of society? Explain. (b) Do you think that the government will be successful in employing congestion charges tocorrect congestion problems and restore efficiency? Why or why not?
Question 4: Private solutionsHow can each of us as private individuals contribute to the reduction of traffic congestion inthe absence of government intervention? Are such private solutions likely to be effective?