Merit and Demerit goods

Question 1

What is a merit good ?

Answer 1

Goods deemed to be beneficial to consumers than they realise

Question 2

Explain why merit goods are not produced as much as demerit goods ?

Answer 2

There is imperfect info ( dont fully understand the benefits )

Asymetric info ( info about +’s not always shared )

Usually under consumed and under produced

Question 3

What is a demerit good ?

Answer 3

Goods deemed to be harmful to consumers than they realise

Question 4

What do demerit goods cause ?

Answer 4

Negative externalities of consumption