ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Merit goods have two basic characteristics: Firstly, unlike a private good, the net private benefit to the consumer is not fully recognised at the time of consumption. Net private benefit is the utility from gained from consumption less any private cost incurred, and equates to net consumer surplus.

Detailed explanation-2: -Merit goods are those which, when consumed, generate positive external benefits.

Detailed explanation-3: -In economics, a demerit good is “a good or service whose consumption is considered unhealthy, degrading, or otherwise socially undesirable due to the perceived negative effects on the consumers themselves"; it could be over-consumed if left to market forces.