Go-ahead for new Heathrow runway

This BBC article covers the recent decision by the British Government to allow a 3rd runway at the London’s Heathrow airport – the world’s busiest airport. This article is a good example of how economists measure the true cost of production.

1) What are private costs and private benefits? What are the private costs and private benefits in creating a 3rd runway?

2) What are external costs and external benefits? Which external costs and external benefits can you see in this article?

3) Based on your findings – should the 3rd runway be built (hint – have you identified all social costs and social benefits in the article?)