Merit And Demerit Goods Flashcards
What is a merit good
A good or service that the government feels that when left to the free market people will under consume. It results in positive externalities in consumption
Who can provide merit goods
Both the state ( gov) and private (companies) sectors of the economy can provide merit goods
what does Classifying a good into a merit good count as
A value judgement
what is a demerit good
a good or service that the government feels that when left to the free market, people will over consume . it bring negative externalities in consumptions
What is a private good
goods which are Excludable and rivalrous in consumption
What is Excludability
Where it is possible ti exclude a good or service vis price
what is Rivalrous
where the consumption of a good or service by one person will prevent others from buying them, typically as they run out of stock
What is a Public good
goods or service which are Non-Excludable and Non-Rivalrous in consumption. Everyone can enjoy them
What is Non-Excludability
You cannot exclude people form enjoying this good or service, everyone has access to it
What is Non-Rivalrous
Where the consumption of a good or service by one person will not prevent others from enjoying it
what can public goods lead to?
Free-Rider Problem
Missing Market
What are Quassi-Public goods
Good which are semi-exclusive and / or semi-rivalrous in consumption
What is Semi-Exclusivity
You can prevent people from using it by charging a price of the service or use of it (Toll)
