Example of merit good is:
Options
AEducation
BAlcohol
CTobacco
DPollution
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Public FinancePYQ - May 2019 (Inter)Question 137 of 20
All Questions Correct Answer
✅ Option a — Education
All Options:
- AEducation
- BAlcohol
- CTobacco
- DPollution
Detailed Solution & Explanation
To determine the correct answer, let's break down the concept of a merit good.
• A merit good is a product or service that is considered beneficial to society, but is often underconsumed due to lack of awareness or information about its benefits.
• Merit goods are typically characterized by positive externalities, meaning that their consumption has a positive impact on others beyond the individual consumer.
• Education is a classic example of a merit good, as it has numerous benefits for individuals and society as a whole, including increased productivity, better health, and higher earning potential.
The correct answer is education because it fits the definition of a merit good, with its numerous benefits and positive externalities.
In contrast, options like alcohol and tobacco are not merit goods, as they are often associated with negative externalities and can have harmful effects on individuals and society.
• These products are more likely to be considered demerit goods, which are products that are considered harmful to society and are often overconsumed.
About This Chapter: Public Finance
Paper
Paper 4: Business Economics
Weightage
10%
Key Topics
Fiscal Policy, Budget, Market Failure
This chapter deals with government finances — how the government earns (taxation) and spends (expenditure) money. Key topics include Fiscal Policy, types of taxes (Direct and Indirect), the Union Budget, Public Debt, and the concept of Market Failure and how government intervention corrects it.
View Official ICAI SyllabusExam Strategy Tip
Focus on the difference between Revenue and Capital items in the budget. Understand Fiscal Deficit and its implications. Tax-related MCQs are commonly asked.
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