Question

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

a. Private benefit

b. Social benefit

c. Neither, it's a cost

d. Both, it's a private and social benefit

Answer 1

Sony's R&D investment that increases profits by 20% is a private benefit for Sony, and it could also provide social benefits if it results in positive externalities for other companies and society.

Step-by-step explanation:

When Sony's R&D investment in digital devices leads to a 20% increase in profits, this is initially considered a private benefit to Sony, as the company directly gains additional profits from its investment. However, if the technology Sony develops benefits other companies or society at large—for example, by enabling other companies to produce similar products, enhancing competition, and leading to better products and services for consumers—there can also be social benefits that represent positive externalities of Sony's R&D investment.