The island of Borneo is famous internationally for its rainforests which can bring many benefits, both private and external. However, the economy is heavily dependent on a finite resource, oil. The discovery of oil reserves in other parts of the world led to a significant fall in the world price of oil. This affected producers of oil in Borneo. Explain the difference between private and external benefits.
Exam No：0455_w21_qp_21 Year：2021 Question No：3(b)
Answer:
Logical explanation which might include:
Private benefits are enjoyed by the producer (1) and consumer (1) first
and second parties (1) of a product, example e.g. revenue for the
producer / satisfaction for the consumer (1).
External benefits are enjoyed by a third party (1) not directly involved
in the production (1) or consumption process (1) example (1)
Private benefits are enjoyed by the producer (1) and consumer (1) first
and second parties (1) of a product, example e.g. revenue for the
producer / satisfaction for the consumer (1).
External benefits are enjoyed by a third party (1) not directly involved
in the production (1) or consumption process (1) example (1)
Knowledge points:
2.10.1 definition of market failure ：The key terms associated with market failure: public good, merit good, demerit good, social benefits, external benefits, private benefits, social costs, external costs, private costs.
Solution:
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