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Demerit good




What is it?
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 is over-consumed if left to market forces.
Examples of demerit goods include tobacco, alcoholic beverages, recreational drugs,…

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increase people going abroad to buy alcohol.




Minimum price-
This will reduce demand of alcohol
as it means that the price is raised,
however, it will lead to excess
supply which means the government
will have to buy the excess or
encourage demand, which is not a
viable choice. Therefore,…

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