Studied by 1 personGoods which are deemed to be beneficial to consumers (more than they realise)
What are merit goods?
Healthcare and education
What are example of merit goods?
Positive externalities by consumption
What externalities come from merit goods?
They are underproduced and underconsumed
What is the issue with merit goods?
Problem with the information, where consumers may not understand benefits/risks
What is information failure?
Information exists but it is not shared equally between two parties
What is asymmetric information?
MSB>MP but quantity and price under where the socially optimum level is
What does market failure by imperfect information for merit goods look like on a diagram?
Goods that are deemed to be harmful to the people using them (more than they realise)
What are de merit goods?
Negative externalities from consumption
What externalities come from demerit goods?
Cigarettes, Alcohol and Gambling
What are examples of de merit goods?
They are over produced and over consumed
What is the issue with demerit goods?
MPB>MSB, Q1 and P1 are both above social optimum
What does market failure by imperfect information for de merit goods look like on a diagram?
Note
Flashcard