What is the correct answer for the question given below? In the RC book , It is mentioned as option “E”.

Although the development of new infrastructure (such public facilities as power plants, schools, and bridges) is usually determined by governmental planning, sometimes this development can be planned more flexibly and realistically by private investors who anticipate profit from the collection of user fees. Such profits can contribute to the financing of more infrastructure if demand proves great enough, whereas the reluctance of developers to invest in such projects can signal that additional infrastructure is not needed. During the economic boom of the 1980’s, for example, the state of Virginia authorized private developers to build a $300 million toll road. These developers obtained the needed tight-of-way from property owners, but by 1993they still had not raised the necessary financing. The unwillingness of investors to finance this project does not negate the viability of privately financed roads; rather, it illustrates a virtue of private financing. If a road appears unlikely to attract enough future traffic to pay for the road, then it should not be built.


Which of the following is most likely to occur if a privately financed bridge that proved to be profitable failed after a number of years to meet the demands of traffic?

c. Profits generated by user fees would be used to help finance the construction of new infrastructure to alleviate the traffic problem.

e.Governmental authorities would be reluctant to rely on private contractors to develop a new bridge.


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