Merit And Demerit Goods

Question 1

What are merit goods

Answer 1

Goods which are under consumed because of their positive externalities or information gaps
Eg education, healthy food

Question 2

What are demerit goods

Answer 2

Goods which are over consumed because of their negative externalities or information gaps.
Eg cigarettes, video games

Question 3

costs to NHS due to Demerit goods

Answer 3

£2bn-£6bn annually to treat smokers
£14bn total costs to taxpayers

Treating Alcohol:
£3.5bn annually
£52bn overall cost to the uk economy

Firms causing air pollution:
£44.88 million annual health and social care costs

Question 4

Benefits to the NHS, merit goods

Answer 4

Exercise:
NHS saves £100 per person per year
Lower absences at work and higher productivity