A government decided to approve a private airport-building scheme because it was socially beneficial. In making its decision it calculated private costs at $\$ 700m$, private benefits at $\$ 800m$ and external costs at $\$ 200m$.
What must have been true about the external benefits of the scheme?
1 )
External benefits equalled private benefits.
2 )
External benefits exceeded external costs.
External benefits exceeded $\$ 100m$.
4 )
There were no external benefits.
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