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Economics · May / June 2025 · Paper 12 · Question 9

2281Market failure

What is a characteristic of a demerit good?

  1. Ait is more beneficial to the consumer than they realise
  2. Bit is overconsumed in the free market
  3. Cit is underproduced in the free market
  4. Dit provides external benefits

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Correct answer: B. it is overconsumed in the free market

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