Answer to Question #175186 in Economics of Enterprise for ismaail

Question

 In the UK the Royal Society for the Protection of Birds (RSPB) has recently bought land around the coast to prevent building on the area where rare birds breed. It has received donations from the public towards the cost. The RSPB plans to set up special visitor centres in the area. (a) Explain which factors of production are involved in the above action by the RSPB. [4] (b) Discuss whether the local area might be more likely to gain or lose from the action of the RSPB. [6] (c) Define the following terms and identify an example of each in the above passage. (i) private cost (ii) social benefit. [4] (d) The RSPB is a private charity. Do you think the protection of rare birds should be the responsibility of a government rather than private charities?

Answer 1

(a) Factors of production involved in the action by RSPB include land, labour, capital and entrepreneurship. The  RSPB has purchased land to build for the rare birds. Senior people with enterprise skills have planned these action of building for the rare birds. Capital such as construction equipment’s will be used to put up the building and labour will be used to construct the building and also running of the project. 

(b) The local area will gain from the action of RSPB. Since the place will act as a tourist Centre, the local community is likely to benefit in many ways; for example they can visit there during their leisure, they can get employment and also infrastructures like roads will be improved.

(C)(I) private cost is any cost that a firm or an individual pays in order to buy or produce goods and services. An example of private cost in this passage is the cost that is used by the RSPB to buy the land.

(ii) Social benefit is the total benefit to the society from producing or consuming a good service. From the passage an example of social benefit will be the adventure and pleasure gained from visiting the place.

(d) The protection of the rare birds should be a responsibility of the government. This is because it is the responsibility of the government to conserve wild animals and their habitats under provision of wild life.