Economics A level

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^MISSF^
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#1
Report Thread starter 6 months ago
#1
What is the difference between demerit goods and negative externalities. Like how is smoking and drinking only demerit goods and not negative consumption externalities as well?
and how is plastic waste only negative production externality and not demerit good as well?
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Ti12
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#2
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#2
Demerit goods are goods which have a negative impact on the consumer and negative externalities are negative effect on 3rd parties.
Smoking and drinking is demerit goods bc it would only badly affect the person who is consumiing it . Plastic waste is negative externality bc is would affect others but not the person who is consuming it. For example when you throw waste in the sea, the sea animals are getting affected negatively but you're not
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^MISSF^
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#3
Report Thread starter 6 months ago
#3
(Original post by Ti12)
Demerit goods are goods which have a negative impact on the consumer and negative externalities are negative effect on 3rd parties.
Smoking and drinking is demerit goods bc it would only badly affect the person who is consumiing it . Plastic waste is negative externality bc is would affect others but not the person who is consuming it. For example when you throw waste in the sea, the sea animals are getting affected negatively but you're not
but surely drinking can cause domestic violence and/or vandalism which are negative externalities.
Can it be that all demerit goods are negativie externalities but not all negative externalities are demerit goods?

Also what could be examples for merit goods and positive externalities?
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vintrevor
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#4
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Demerit goods can usually also be negative externalities where consumption effects a third party.


For demerit goods such as smoking you could say it also causes a negative externality as it causes pollution and second-hand smoking which effects third parties.

I would say you can say that all demerit goods are negative externalities but not all negative externalities are demerit goods because there are some negative externalities such as driving a car which causes pollution but is not a demerit good.

An example of a merit good could be education or health services such as vaccinations as they both improve social welfare. A merit good could also be a healthy drink which could be consumed instead of a fizzy drink or alcohol which cause harm to the consumer.

An example of a positive externality could also be education such as university education or the building of a new airport as more people can use airport services.
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