A Level Economics AQA Practice Exam

What are private benefits?

1. The benefits experienced by society as a whole

2. Benefits arising from market inefficiencies

3. Benefits that directly accrue to those taking an action

4. Benefits included in social costs

The correct answer is: Benefits that directly accrue to those taking an action

Private benefits refer to the advantages or gains that individuals or entities receive directly from their actions or decisions. This means that when someone engages in an economic activity, such as consuming a product or investing in a business, they experience benefits that are tangible and measurable to them personally, without considering externalities or societal impacts. For instance, if a consumer buys a new phone, their private benefit includes the satisfaction and utility they gain from using that phone. Similarly, a business owner may enjoy profits and increased reputation from a successful venture, which are direct private benefits of their investment and effort. The other options focus on different aspects of economic impact. For example, societal benefits encompass a broader, collective viewpoint, while benefits arising from market inefficiencies are related to situations where market outcomes do not optimize resource allocation. Additionally, benefits included in social costs look at overall societal costs rather than focusing solely on individual gains. Hence, the correct answer highlights the nature of private benefits accurately.