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Flashcards in Types Of Goods Deck (9)
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1
Q

Define public goods

A

Product that one individual can consume without reducing its availability to another individual

2
Q

Define private goods

A

Benefits accrue to the individual and others are prevented from consuming it

3
Q

Define merit goods

A

Goods that bring more benefit to the individual than they realise

4
Q

How is merit good consumption encouraged

A

Arise due to information failure
MPB = D, level of demand that exists —> based on the consumers perception of private benefits
MSB —> benefit to society is greater than the perceived MPB as it reflects true benefits individuals receive from the consumption of merit goods

5
Q

Define demerit goods

A

Goods whose consumption will cost/harm the individual more than they realise

6
Q

How are demerit goods consumption discouraged

A

Arise due to information failure
Consumers overvalue the private benefits of the consumption of the good
MPB = D, level of demand existing in the market —> based on consumers perception of their private benefit
MSB, benefit to society is less than the perceived MPB —> reflects true benefits individuals receive from consumption of demerit goods

7
Q

What are characteristics of a public good

A

Non excludable

Non rivalrous

8
Q

What are characteristics of a private good

A

Excludable and rivalrous

9
Q

What are quasi public goods, give an example

A

Public goods with characteristics of private goods

E.g. NHS —> provided by public sector but not a public good as resources are limited (waiting lists)