A demerit good is a type of good that society deems to be harmful for individuals. It is often over-consumed if left to market forces. Here are the answers to your options:

1. Comes with an external benefit to society: This is incorrect. Demerit goods are typically associated with negative externalities, not benefits.

2. Gives rise to market failure: This is correct. The over-consumption of demerit goods can lead to market failure. This is because individuals often do not take into account the negative effects of their consumption, leading to a higher quantity consumed than what would be socially optimal.

3. Comes with an external cost to society: This is correct. The consumption of demerit goods often leads to negative externalities, which are costs that affect third parties and are not reflected in the price of the good.

4. One needs no merit to buy: This is somewhat correct. The term "demerit" in this context does not refer to a person's worthiness or merit. Instead, it refers to the fact that these goods are considered harmful. However, it's worth noting that while there's no "merit" needed to buy these goods, governments often step in to discourage their consumption through means like taxes, age restrictions, etc.

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A demerit good is a type of good that society deems to be harmful for individuals. It is often over-consumed if left to market forces. Here are the answers to your options:

1. Comes with an external benefit to society: This is incorrect. Demerit goods are typically associated with negative externalities, not benefits.

2. Gives rise to market failure: This is correct. The over-consumption of demerit goods can lead to market failure. This is because individuals often do not take into account the negative effects of their consumption, leading to a higher quantity consumed than what would be socially optimal.

3. Comes with an external cost to society: This is correct. The consumption of demerit goods often leads to negative externalities, which are costs that affect third parties and are not reflected in the price of the good.

4. One needs no merit to buy: This is somewhat correct. The term "demerit" in this context does not refer to a person's worthiness or merit. Instead, it refers to the fact that these goods are considered harmful. However, it's worth noting that while there's no "merit" needed to buy these goods, governments often step in to discourage their consumption through means like taxes, age restrictions, etc.

Knowee AI · Accepted Answer

A demerit good is a type of good that society deems to be harmful for individuals. It is often over-consumed if left to market forces. Here are the answers to your options:

1. Comes with an external benefit to society: This is incorrect. Demerit goods are typically associated with negative externalities, not benefits.

2. Gives rise to market failure: This is correct. The over-consumption of demerit goods can lead to market failure. This is because individuals often do not take into account the negative effects of their consumption, leading to a higher quantity consumed than what would be socially optimal.

3. Comes with an external cost to society: This is correct. The consumption of demerit goods often leads to negative externalities, which are costs that affect third parties and are not reflected in the price of the good.

4. One needs no merit to buy: This is somewhat correct. The term "demerit" in this context does not refer to a person's worthiness or merit. Instead, it refers to the fact that these goods are considered harmful. However, it's worth noting that while there's no "merit" needed to buy these goods, governments often step in to discourage their consumption through means like taxes, age restrictions, etc.

demerit good is a good that:Comes with an external benefit to societyGives rise to market failureComes with an external cost to societyOne needs no merit to buy

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