Information provision

Question 1

What is information provision ?

Answer 1

GOVT funded information such as Ads , education in order to encourage or discourage consumption

Question 2

How does information provision increase the consumption of merit goods ?

Answer 2

Demand shifts to the right as consumers make more rational decisions knowing the true benefit

Thus the quantity supplied increases to the socially optimum level

Question 3

How does information provision reduce the consumption of demerit goods ?

Answer 3

Demand shifts from the private benefit to the socially benefit area (left) which as a result reduces the quantity of that bad good to the socially optimum level

Question 4

What are some counter points for the usage of information provision to solve market failure ?

Answer 4

Expensive to fund / cuts in spending elsewhere

0 certainty of success

Short term it may not gain traction but as the message gets spread into the long term people change their actions