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From course:

Economics A Level (DONEEEEEEE)

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Question:

Why can the Short Term Decision Excaberate Underconsumption of Merit Goods and Overconsumption of Demerit Goods?

Author: eric_galvao



Answer:

-Sometimes only the Short term Benefits / Costs are Considered, so the Future is failed at being Considered - Not a Rational Choice? -Merit Goods Long Term Private Benefit will Outweigh their Short Term MPB, and Demerit Goods will have Greater long term MPC than their short term MPC [So therefore that’s why Demerit Goods are over consumed as Long term isn’t being Factored in]


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