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1.8.5 Merit and demerit goods

Why are merit goods under-consumed in free markets?

A
  • Consumers undervalue private costs, often because of imperfect information.
  • They ignore negative externalities imposed on wider society.
B
  • Consumers overvalue private costs, often because of perfect information.
  • They include positive externalities benefiting wider society.
C
  • Consumers undervalue private benefits, often because of imperfect information.
  • They ignore positive externalities benefiting wider society.
D
  • Consumers overvalue private benefits, often because of imperfect information.
  • They ignore negative externalities imposed on wider society.

1.8.5 Merit and demerit goods Flashcards

  1. A Level
  2. /Economics
  3. /1.8.5 Merit and demerit goods

Flashcards for AQA A Level Economics 1.8.5 Merit and demerit goods, covering the key terms, economic models and case studies you need to recall for Paper 1, Paper 2 and Paper 3. 20 cards, matched to the AQA A Level Economics (7136) specification.