Understanding Merit and Demerit Goods: Definitions, Causes, and Value Judgments

The video tutorial explains merit and demerit goods, highlighting their definitions and reasons for their under or over provision in markets. It discusses externalities and imperfect information as key factors affecting market provision. Examples include pension schemes as merit goods and heroin as a demerit good. The tutorial also covers the role of value judgments in classifying goods and concludes with a recap of the main points.

Provide an example of a merit good and explain the positive externalities associated with it.

What are the implications of classifying a good as a demerit good for society?

Explain how value judgments play a role in classifying goods as merit or demerit goods.