Goods whose consumption the public sector promotes are called _______ goods, and goods whose consumption the public sector discourages are called _______ goods.

Question

Quizplus · Accepted Answer

The term "merit goods" refers to goods and services that the government believes are essential for citizens to have but are under-consumed by the population. These goods have positive externalities since they benefit society as a whole. Examples of merit goods include education, healthcare, and public transportation. The government's role is to promote the consumption of these goods. 
On the other hand, demerit goods are goods that the government discourages people from consuming due to their harmful effects on society. These goods have negative externalities since their consumption creates costs for society that are not reflected in their market price. Examples of demerit goods include tobacco, alcohol, and illegal drugs. The government's role is to discourage the consumption of these goods.

Goods Whose Consumption the Public Sector Promotes Are Called _______