Discuss the likely private and external benefits of viewing educational websites and TV programmes

Edexcel A-Level Economics Paper 1 June 2023 Extract

With reference to Extract C, discuss the likely private and external benefits of viewing educational websites and TV programmes. (12 marks)

Private benefit is the benefit directly to the consumer, whereas external benefit is the benefit to a third party from an economic transaction. The third party specifically refers to anyone apart from the consumer or the producer.

One likely private benefit is that children will become better educated. Extract C states that 'the guides are written by teachers and subject experts'. This will increase the quality of education children will receive as well as increasing the amount they can learn, as it is online, meaning that once they come home from school they can keep on learning. This will increase their skills and qualifications. This is a private benefit as the consumers are directly benefitting from its consumption.

However, the private benefit of such goods and services is very difficult to measure. Firstly, the benefit students gain from using websites like BBC Bitesize might be dependent on how well they are initially taught at schools, or how much they are encouraged by their family members. Also, the private benefit can vary with time. During COVID, or during school holidays, online learning becomes more of a necessity, so the private benefit might increase.

One likely external benefit is the increase in productivity for firms. For example, BBC Bitesize achieved around 1.2 million weekly unique browsers. This will lead to a large amount of students increasing their skills and therefore education, meaning that their productivity will increase. This will benefit firms as their supply of labour will be productive allowing decreased costs and so increased profits. This is an external benefit as it benefits the third party (firms). The issue with externalities like these are that they get ignored by the buyer and seller, so these educational platforms are going to be left under-consumed at q1 in a free-market, rather than being consumed at the socially optimal level of output q*.

However, this external benefit will only be experienced after a long period of time. It will be years before young children enter the labour market, meaning that there is a huge delay before firms can experience the spillover effects such as an increase in productivity. Nonetheless, this will still provide a significant external benefit to firms as seen by the distance between MSB and MPB on the graph.

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