CAIE A-Level Economics 1.6.4 Demerit Goods

CAIE A-Level Economics 1.6.4 Demerit Goods
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise explaining demerit goods as over-consumed private goods because consumers underestimate personal costs, using health-risk and information-failure evidence.

How this is tested

  • link imperfect information to consumers undervaluing long-term private costs or health risks
  • explain why the resulting market consumption exceeds the level chosen with full information

Question 6

[Maximum number: 1]

Some goods are over-consumed in a market economy.
What is likely to be the cause of this?

A

Consumer surplus exceeds producer surplus.

B

Consumers undervalue the benefits of consuming the goods.

C

There is excess supply in the market for the goods.

D

There is imperfect information in the market.