Merit Goods Flashcards
1
Q
Merit good
A
A good which if left to be provided by free market would be under-consumed
Doesn’t have all of characteristics of public good
2
Q
Cause of merit good
A
Provides positive externalities with greater social benefit
May be subsidised
3
Q
Why are merit goods under provided
A
Because of imperfect information
Eg school don’t understand long term benefit
4
Q
Principle agent
A
When one person or entity is able to make decision and or take actions on behalf of another person or entity
5
Q
Demerit good
A
Where if a good is left to the free market there will be over consumption leading to negative externalities
