Question 5
[Maximum number: 1]
Which merit good is likely to be under-consumed the most?
level of imperfect
information among
consumers
subsidy received
by producers
high
yes
high
no
low
yes
low
no
CAIE A-Level Economics 1.6.3 Merit Goods
Practise explaining merit goods as under-consumed private goods because consumers underestimate their benefits and assessing education, healthcare or libraries against…
How this is tested
- link imperfect information to underestimated private benefits and consumption below the informed level
- distinguish merit goods from public goods by testing rivalry and excludability
- evaluate subsidy or public provision according to information failure, access and fiscal cost