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MARKET FAILURE Merit goods are the physical commodities which either directly or indirectly provides for the satisfaction of human wants. Consumer goods (or final-demand goods) are those used for consumption purposes. They can be classified into non-durable goods (such as food) and durable goods (such as refrigerators). Producer goods are those used to produce other goods and services. These comprise intermediate goods (raw materials and semi-finished items) and fixed capital goods (buildings and equipment). Services are normally distinguished from goods by their intangible nature. They are normally consumed at the instant of their production, as in the case of a haircut. 'Bads' also exist; they have a negative value and an adverse effect on human satisfaction (for example, pollution). Public goods are those which, when consumed by one individual, are not depleted (for example, street lighting and national defence). Externalities are an activity or part of an activity which is not given...

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