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AS) why is fast food demerit good? Watch

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    Hi,

    I know that fast food is a demerit good and it has negative externalities of comsumption- obesity.

    But since demerit good causes negative impacts on third parties, how does consuming fast food affect them in any way?

    Because only people who consume fast food get overweight, in what way does it cause social cost?
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    Overweight - obesity - increased health risk like coronary heart disease due to increase in cholesterol- cost to the NHS - government provided system - increase in tax for households
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    I think maybe you've got your definitions a lil bit mixed up. A demerit good is one which provides consumers with less benefits than they expect (for example, if I ate a burger without knowing that it would make me fat then the burger is a demerit good). An externality is an impact on a third party - consumers and producers know about the impact on the third party but they don't care. For example, if I ate my burger on the bus and it smelled bad to everyone, that would be an externality.

    An externality from consuming fast food may be that if I eat a lot of McDonald's and get heart disease or diabetes then it will cost the NHS a lot of money, or I may miss time of work due to the illness which would cost my employers money. An externality from producing fast food may be that the oil from a restaurants kitchen is causing pollution in a river.

    Fast food could be seen as a demerit good if I consume it without realising that it is unhealthy and that it can have consequences on my health.

    Hope this was helpful! Also, I'm not certain that this is correct so it might be worth double checking in your textbook
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    (Original post by Christie_xx)
    I think maybe you've got your definitions a lil bit mixed up. A demerit good is one which provides consumers with less benefits than they expect (for example, if I ate a burger without knowing that it would make me fat then the burger is a demerit good). An externality is an impact on a third party - consumers and producers know about the impact on the third party but they don't care. For example, if I ate my burger on the bus and it smelled bad to everyone, that would be an externality.

    An externality from consuming fast food may be that if I eat a lot of McDonald's and get heart disease or diabetes then it will cost the NHS a lot of money, or I may miss time of work due to the illness which would cost my employers money. An externality from producing fast food may be that the oil from a restaurants kitchen is causing pollution in a river.

    Fast food could be seen as a demerit good if I consume it without realising that it is unhealthy and that it can have consequences on my health.

    Hope this was helpful! Also, I'm not certain that this is correct so it might be worth double checking in your textbook
    This is pretty much correct, but for demerit goods its not just whether consumers are aware of the consequences of eating it they could also just choose to ignore them (ie smoking). Generally demerit goods will have negative externalities.
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    (Original post by dean01234)
    This is pretty much correct, but for demerit goods its not just whether consumers are aware of the consequences of eating it they could also just choose to ignore them (ie smoking). Generally demerit goods will have negative externalities.
    Ohh that makes sense! Thank you, I didn't know that it's still a demerit good if people choose to ignore the consequences! The point I was making was just that externalities are different to merit or demerit goods
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    (Original post by Christie_xx)
    Ohh that makes sense! Thank you, I didn't know that it's still a demerit good if people choose to ignore the consequences! The point I was making was just that externalities are different to merit or demerit goods
    It is an important distinction to make because externalities can arise from the production as well as consumption of goods. So it could be confusing if you thought demerit goods and negative externalities were synonymous.
 
 
 
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