Some examples of relevant economic concepts and principles thatmight be applied to this question include: the functions of price,elasticity, private and social costs, market failure and governmentfailure.Developing theresponse to thequestion:Analysis• developing a chain of reasoning to explain why congestion is aneconomic problem• use of relevant diagrams to support the explanation above• developing a chain of reasoning to explain how increasing taxes onfuel will help to reduce congestion• developing a chain of reasoning to explain how a system of roadpricing will help to reduce congestion (various forms of road pricingmight be analysed)• explaining the importance of PED and CED in relation to theeffectiveness of increasing taxes on fuel and road pricing• analysis of how subsidising, for example bus and rail transport, willhelp to reduce congestion• use of a relevant diagram to support the previous bullet point• developing a chain of reasoning to explain how investing in publictransport and/or improving the quality of the service provided willhelp to reduce congestion• analysis of the evidence in the extracts.Evaluation• the pros and cons of increasing taxes on fuel• the pros and cons of building more roads to reduce congestion• the pros and cons of road pricing• the pros and cons of different forms of road pricing• the pros and cons of subsidising travel by bus or rail• the pros and cons of investing in public transport and/or improvingthe quality of the service provided• possible unintended consequences of the different methods, eg theimpact of road pricing on local business in towns and cities• the likelihood of government failure, eg inadequate informationmeans that the government is likely to set a price for using roads(or the fuel duty) which is too high or too low, government policy islikely to be swayed by public opinion and electoral success• equity arguments, eg the impact of the different policies on: thepoorest members of society, the road user versus the taxpayer,town versus country dwellers, commuters• the comparative costs to the taxpayer/society of implementing andoperating the different methods, eg the cost of subsidising travel bybus, the cost of improving the rail network, the cost of investing inthe technology needed to set up a system of road pricing andoperating such a system• use of the data in the extracts to help to assess the differentmethods, egExtract Cparagraph 1 which points out the likelihoodof a long- term decline in fuel duties,Extract B(lines 20−22) which
indicates that it might be impractical to try to achieve a significantreduction in congestion by just relying on a switch to rail• consider the view that the only effective way to reduce congestionis likely to involve a combination of policies• an overall assessment of the relative merits of the different methods• a final judgement that considers which method(s) are likely to bemost appropriate.Examiners should note that credit can be given for basic evaluation if a studentsimply identifies some of the arguments for and against the different methods thatmight be employed to reduce congestion. Basic evaluation (and good analysis)would allow the answer to achieve low Level 4. Stronger evaluation is provided bystudents who are able to support arguments both for and against the differentmethods of reducing congestion by the use of evidence and/or sound economicanalysis.
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