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Chapter 13: Problem 2

Suppose that Sony's R&D investment in digital devices has increased profits by 20%. Is this a private or social benefit?

Short Answer

Expert verified
The 20% increase in profits from Sony's R&D investment in digital devices directly benefits the company without any mention of positive societal impacts. Therefore, this is a private benefit.

Step by step solution

01

Understand Private and Social Benefits

Private benefits are the gains that directly accrue to a company or individual as a result of their actions or investments. These benefits could include increased revenues, cost savings, or improved efficiency. Social benefits, on the other hand, are the positive impacts that an action or investment has on society as a whole. These can include things like improved public health, increased access to education, or reduced pollution. Social benefits are typically external to the company or individual making the investment and can be difficult to quantify.
02

Analyze Sony's R&D Investment

Sony's R&D investment in digital devices has led to a 20% increase in profits. This increased profit is a direct result of their investment and therefore, accrues to the company. At this stage, we don't have information regarding any positive impacts on society as a whole due to this investment.
03

Determine if the Benefit is Private or Social

Based on the information provided, the 20% increase in profits from Sony's R&D investment in digital devices directly benefits the company. Since there is no mention of any positive societal impacts resulting from this investment, we can conclude that this is a private benefit.

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