What is a correct definition of a demerit good?
A.
a good which generates external benefits
B.
a good with higher private costs than social costs
C.
a good which is more harmful to consumers than they realise
D.
a good which provides no costs to third parties
Exam No：0455_s24_qp_11 Year：2024 Question No：9
Answer:
C
Knowledge points:
2.10.1 definition of market failure ：The key terms associated with market failure: public good, merit good, demerit good, social benefits, external benefits, private benefits, social costs, external costs, private costs.
2.10.2 causes of market failure ：The implications of misallocation of resources in respect of the over consumption of demerit goods and goods with external costs, and the under consumption of merit goods and goods with external benefits.
2.10.3 consequences of market failure：The implications of misallocation of resources in respect of the over consumption of demerit goods and goods with external costs, and the under consumption of merit goods and goods with external benefits.
4.1.1 the role of government
Solution:
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