Evaluating the Microeconomic Concept of Merit Goods

The video tutorial explores the concept of merit goods, which are underprovided and underconsumed in the market due to positive consumption externalities and imperfect information. It explains how these factors lead to market failure, represented by a deadweight loss. The tutorial emphasizes the importance of evaluating the size of market failure to propose effective solutions, such as government subsidies, while also considering the risk of government failure.

What are merit goods and why are they considered underprovided by the market?

Explain the difference between marginal private benefit and marginal social benefit in the context of merit goods.

What is a positive consumption externality and how does it relate to merit goods?

Discuss the factors that can affect the size of market failure in the context of merit goods.

How does imperfect information among consumers contribute to market failure for merit goods?

Why is it important to evaluate the size of market failure in merit goods?

What are the potential consequences of government intervention in correcting market failure for merit goods?