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De-merit Goods Task


Cigarettes – A De-Merit Good? As we have previously discussed most goods have elements of positive and negative externalities. Cigarettes have some obvious negative externalities, but there are some positive ones as well that aren’t often stated.You are to produce a report that lists all of the positive and negative externalities that arise from the consumption of cigarettes.  It is necessary for you to arrive at a conclusion, i.e., which externality is greater and is the social optimum above or below the private one?  Should the government intervene in the cigarette market?    

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E-mail Steve Margetts