Exam-style question
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Analyse 3.1.8.5 merit and demerit goods using a productivity comparison from Individuals, firms, markets and market failure.
Model answer
What a good answer should say
- A strong answer should analyse 3.1.8.5 merit and demerit goods by defining the relevant economic relationship, applying it to the productivity comparison, and showing how the mechanism changes incentives, market outcomes, welfare or macroeconomic performance.
Explanation
Why this works
The reasoning should move from cause to transmission mechanism to consequence. Use a diagram, calculation or data point if it is relevant, then test the answer with Economics evaluation: size of effect, time period, elasticity or responsiveness, assumptions, and distribution of gains and losses.
This keeps the response specific to The market mechanism, market failure and government intervention in markets rather than repeating a generic question template.
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