Classifying goods: public, merit and demerit goods

Learning objectives

Distinguish free goods from economic goods, and private goods, which are rival and excludable, from public goods, which are non-rival and non-excludable

Explain the free-rider problem and why a free market does not provide public goods such as street lighting and national defence

Explain why merit goods such as education and vaccination are under-consumed, and demerit goods such as tobacco over-consumed, when consumers have imperfect information

Identify the reasons for government intervention in markets: non-provision of public goods, over-consumption of demerit goods, under-consumption of merit goods and prices judged too high or too low

(A Level) Explain how geographical and occupational immobility of labour stops resources moving to their most productive use