Provision of Merit and Demerit Goods Compared to Private Goods
TITLE
The provision of merit and demerit goods differs from the provision of other private goods.
ESSAY
Title: The Provision of Merit and Demerit Goods in Market and Mixed Economies
Introduction:
💥 Introduce the concept of merit and demerit goods and how they differ from other private goods.
💥 Highlight the role of imperfect information in the allocation of goods in market and mixed economies.
Allocation of Private Goods:
💥 Explain how private goods, including merit and demerit goods, are allocated in an economy through the demand and supply mechanism.
💥 Discuss the challenges of imperfect information leading to under or overconsumption of merit and demerit goods.
Provision of Merit and Demerit Goods:
💥 Explore the different methods of allocation for merit and demerit goods compared to other private goods.
💥 Analyze how imperfect information influences the provision of merit and demerit goods in market and mixed economies.
Consequences of Imperfect Information:
💥 Evaluate the consequences of imperfect information in market and mixed economies for the provision of merit and demerit goods compared to other private goods.
💥 Compare the efficiency of government intervention in addressing under and overconsumption of merit and demerit goods in different economic systems.
Evaluation:
💥 Discuss the need for government intervention in providing merit and demerit goods due to imperfect information in the market economy.
💥 Consider how other private goods can be efficiently allocated by the market economy but may lead to disparities in access for certain groups.
💥 Justify whether the consequences of imperfect information are more serious in a market economy than in a mixed economy based on the analysis provided.
Conclusion:
💥 Summarize the key points regarding the provision of merit and demerit goods in market and mixed economies.
💥 Offer a final assessment on whether imperfect information has more serious consequences in a market economy compared to a mixed economy.
SUBJECT
ECONOMICS
PAPER
A level and AS level
NOTES
The provision of merit and demerit goods differs from the provision of other private goods. Assess the view that the consequences of imperfect information are more serious in a market economy than in a mixed economy.
Use Table A: AO1 Knowledge and understanding and AO2 Analysis and Table B: AO3 Evaluation to mark candidate responses to this question.
AO1 and AO2 out of 8 marks. AO3 out of 4 marks.
Indicative content: responses may include:
AO1 Knowledge and understanding and AO2 Analysis
💥 An analysis of how private goods (which include merit and demerit goods) are allocated within an economy through the demand and supply mechanism.
💥 An explanation of the existence of imperfect information with respect to merit and demerit goods and the associated problems of under or overconsumption.
💥 An explanation of how this is likely to lead different methods of allocation for both merit and demerit goods than for other private goods, (how other private goods are allocated and how this differs from the provision of merit and demerit goods and any other problems that may be associated with their allocation.)
💥 Analysis should consider the consequences of imperfect information in both a market and a mixed economy for the provision of merit and demerit goods compared to other private goods. Answers which do not compare the provision of merit/demerit goods in both a market economy and a mixed economy cannot gain more than L2.
AO3 Evaluation Points to consider include:
💥 Merit goods and demerit goods need government intervention because of the issues of under and over consumption due to imperfect information, so the market economy fails to operate efficiently.
💥 Other types of private goods can be efficiently provided by the market economy without government intervention but the process of allocation may mean e.g., low💥income groups do not have the same access to certain goods.
💥 Leading to a justified conclusion answering the question of whether the consequences of imperfect information are more serious in a market economy than a in mixed economy.