Cambridge International as and a level Economics Ebook

SELF-ASSESSMENT TASK 
1.8
Explain, for your economy, whether each of the 
following may be described as a private, a public or a 
quasi-public good:
■
the local police service
■
a chocolate bar
■
a public park
■
a 
fi rework display
■
a stretch of road
■
street 
lighting
■
a public cricket pitch
■
a 
museum.
Free rider: 
someone who does not pay to use a public good.
KEY TERM
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Cambridge International AS Level Economics

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Merit goods, demerit goods and 
information failure
A 
merit good
is a good that has positive side eff ects 
associated with it. Th
us, an inoculation against a 
contagious disease might be seen as a merit good. Th
is is 
because others who may not now catch the disease from 
the inoculated person also benefi t. A 
demerit good
, on the 
other hand, is seen as any product that has adverse side 
eff ects associated with it. Th
us, junk food can be seen as a 
demerit good because overconsumption of fatty foods with 
few nutrients can be viewed as a cause of ill health.
Merit good: 
one that has positive side eff ects when 
consumed.
Demerit good: 
one that has adverse side eff ects when 
consumed.
KEY TERMS
Governments tend to provide merit goods, since there is 
likely to be underproduction and underconsumption; with 
demerit goods there is likely to be overproduction and 
overconsumption largely because these are goods that are 
habit-forming, relatively cheap and readily available. To 
understand these types of good, it is necessary to appreciate 
that there is