Merit and Demerit goods
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Last updated 7:22 PM on 9/14/25
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6 Terms
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Merit good
Underconsumed good with positive externalities
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Demerit good
Overconsumed good with negative externalities
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Negative externality
Caused by demerit goods.
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Negative externality to third parties of consuming cigarettes
Second-hand smoking
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Positive externality to third parties of education
Higher skilled workforce
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Information failure
Consumers not being aware of the long run implications of consuming a good.
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