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Economics A Level

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Question:

Why are Demerit Goods Over-Consumed or Over-Produced?[Free Market Diagram]

Author: go kys

Why are Demerit Goods Over-Consumed or Over-Produced?[Free Market Diagram]


Answer:

-This is how the Free Market Operates, only caring for the Private Benefit and Cost. Demerit Goods will have MSB or MSC more to the Left than their Private Counterpart.-And since MSB / MSC is Ignored, an Over-consumption / production is Present and a Welfare Loss is Present.


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-This is how the Free Market Operates, only caring for the Private Benefit and Cost. Demerit Goods will have MSB or MSC more to the Left than their Private Counterpart.-And since MSB / MSC is Ignored, an Over-consumption / production is Present and a Welfare Loss is Present.
1 answer(s) in total

Author

go kys
go kys