ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Tobacco, alcoholic drinks, addictive substances, betting, unhealthy snacks, pornography, and prostitution are examples of demerit goods. Due to the obvious nature of these items, governments frequently impose taxes on them (particularly, sin taxes), as well as limiting or prohibiting their usage or advertisement.

Detailed explanation-2: -Examples of demerit goods include tobacco, alcoholic beverages, recreational drugs, gambling, junk food and prostitution. Because of the nature of these goods, governments often levy taxes on these goods (specifically, sin taxes), in some cases regulating or banning consumption or advertisement of these goods.

Detailed explanation-3: -Demerit goods are goods which are deemed to be socially undesirable, and which are likely to be over-produced and over-consumed through the market mechanism. Examples of demerit goods are cigarettes, alcohol and all other addictive drugs such as heroine and cocaine.

Detailed explanation-4: -Healthcare and education are examples of merit goods. Demerit goods are over-consumed due to imperfect information. Examples of demerit goods include tobacco, alcohol and sugar. Demerit goods lead to negative externalities and are often taxed by the government.