Merit Goods:

Merit wants are those, which all members of the society are able to satisfy. Such wants include educational and health needs of the society. These merit goods help the economy in attainting a high level of efficiency and contribute to the achieving of basic objectives of the society. Educations, Health, Park are merit goods.

Consumption of merit goods should be encouraged whereas that by demerit or non-merit goods should, be discouraged or subsidy on housing is desirable while imposing taxes on cigarette results in discouraging its use as cigarette is held undesirable for the society.

Thus merit wants become public wants if their satisfaction is provided through public budget, over and above what is provided for through the market and paid for private buyers. It includes satisfaction on items such as publicly furnished school, free education, subsidized low cost housing, etc.

Example

a) Provision of education should not be left on the market otherwise brilliant students may not be able to achieve the desired level of education. If this happens then the standard of efficiency in the economy will reduce.

b) Health services should not be left on the market forces otherwise the precious lives may lost.

c) Taxes are imposed on the consumption of liquor as is held to be undesirable.