Governments frequently provide merit goods, such as public libraries and preventative healthcare, free of charge to consumers. The primary economic justification for this is that
these goods are characterised by non-rivalry and non-excludability.
the social benefits of consuming these goods exceed the private benefits, leading to under-consumption in a free market.
the production of these goods inevitably generates significant negative externalities.
private sector firms are legally prohibited from supplying such services.
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.