What Is a Merit Good?

A merit good is a good that is deemed as such plummy by society due to its positive externalities. An model of a merit good is education. Education confers private derive to the individual as there is personal satisfaction in gaining skills or knowledge. Furthermore, education allows an individual to get employment, gravel an income and thus have a high standard of living. However, there is too social benefit because when an improve person enters the workplaceforce, it (the hands) is likely to execute more productive. An uneducated person may only have the capacity to perform menial tasks such as rationalize cultivation or blue collar work whereas an educated person will probably be able to work in the higher value added electronics or medical sector. Economists loosely agree that a more productive work force is desirable as it can lead to economic growth and higher national income. Proof of this can be seen from the difference among the average GDP of countries that have a majority of its workforce in primary industries and those countries whose workforce is mainly in secondary winding or tertiary industries.

A more educated workforce also increases the likelihood of higher value added foreign investment funds as there will be a seduce supply of educated labour. As merit goods are non public goods, they are in effect excludable and exhaustible. An example is again, places in an educational institution. Due to this scarcity, merit goods will command a price on the free market. Only those who can open this price will eradicate the good. Consumers will only consume to the point where private cost is equal to private benefit. The optimal level of utilization is where social benefit equals social cost. Because consumers do not take into account the social benefit consumption has, there tends to be under-consumption of merit goods. If you want to get a full essay, order it on our website: Orderessay

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