Merit good
Definition. A merit good is a good or service that the government judges people will under consume relative to what is socially desirable, often because consumers undervalue its private benefits or because it generates positive externalities. Education and healthcare are common examples.
Because merit goods are under consumed in a free market, the government may encourage their consumption through subsidies, direct provision, or information campaigns to move output closer to the socially optimal level.
This term belongs to Merit and Demerit Goods in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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