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Property prices are influenced by a variety of factors. One of these factors is how pleasant is the surrounding area. Sam is a property developer,
Property prices are influenced by a variety of factors. One of these factors is how pleasant is the surrounding area. Sam is a property developer, who develops properties in Fortitude Valley. He also invests in redeveloping laneways in this area. This has helped to see property prices in Fortitude Valley increase. Which of the following statements are true: O Sam's decision to redevelop laneways in Fortitude Valley is a positive externality for Jared who is also a property owner in Fortitude Valley. The marginal social benefit of developing a laneway exceeds the marginal private benefit realised by Sam. V There is no positive externality as Sam is considering the benefits to his own property developments when deciding whether to develop the laneways. This means the "externality" has already been internalised. O The marginal social benefit of developing a laneway would be less than the marginal private benefit of developing a laneway
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