Types Of Products

Question 1

Public good

Answer 1

• a good that is completely free to everyone

Question 2

Merit good

Answer 2

• a commodity or service, such as education, that is regarded by society or government as deserving public finance.

Question 3

Demerit goods

Answer 3

• In economics, a demerit good is “a good or service whose consumption is considered unhealthy, degrading, or otherwise socially undesirable due to the perceived negative effects on the consumers themselves”. It is over-consumed if left to market forces.

Question 4

Veblen good

Answer 4

• Veblen goods are types of luxury goods for which the quantity demanded increases as the price increases, an apparent contradiction of the law of demand, resulting in an upward-sloping demand curve. Some goods become more desirable because of their high prices.

Question 5

Giffen good

Answer 5

• a Giffen good is a product that people consume more of as the price rises and vice versa—violating the basic law of demand in microeconomics.

Question 6

Quick extra one - law of diminishing marginal utility

Answer 6

• as consumption increases the marginal utility derived from each additional unit declines. Marginal utility is derived as the change in utility as an additional unit is consumed.
• your really thirsty and you drink water, as you drink more water your demand decreases for the water