The benefits enjoyed by those who are not involved in the consumption and production activities are called

The benefits enjoyed by those who are not involved in the consumption and production activities are called

• A. External Benefits
• B. Private Benefits
• C. Social Benefits
• D. Public Benefits

Answer: (A)

External benefits are the benefits that spill over to people who are not directly involved in the production or consumption activity. When a market activity creates advantages for third parties, those gains are not captured in the price, so they are external to the transaction. This explains why the term is used for those who don’t participate in the activity but still enjoy its good effects. Private benefits go to the person or firm directly involved in the activity, and social benefits equal private plus external benefits. Public benefits isn’t the standard label for this concept.

External benefits are the benefits that spill over to people who are not directly involved in the production or consumption activity. When a market activity creates advantages for third parties, those gains are not captured in the price, so they are external to the transaction. This explains why the term is used for those who don’t participate in the activity but still enjoy its good effects. Private benefits go to the person or firm directly involved in the activity, and social benefits equal private plus external benefits. Public benefits isn’t the standard label for this concept.