Merit And Demerit Goods Flashcards
What are merit goods
Goods deemed more beneficial to consumers then they realise
What causes merit goods to be under consumed
Imperfect information
Due to information failure or asymmetric information
What externalities do merit goods have in consumption
Positive externalities in consumption
Examples of merit goods
Healthcare
Education
Exercise
In the free market what will happen to merit goods
Under consumed/produced
What are de merit goods
Good deemed more harmful to consumers than they realise
Why are demerit goods more harmful then they realise
Imperfect information
Information failure and asymmetric information
Examples of demerit goods
Cigarettes
Alcohol
Gambling
In the free market what will happen to demerit goods
Over consumed/produced
What type of externalities do demerit goods have
Negative consumption externalities
