Which statement best captures the concept of merit goods in public economics?

Which statement best captures the concept of merit goods in public economics?

• A. Merit goods are over-consumed in a free market.
• B. Merit goods are under-consumed without intervention; subsidies encourage beneficial activities like conservation and clean energy.
• C. Merit goods are solely private goods with perfect market outcomes.
• D. Merit goods are always provided exclusively by private markets.

Answer: (B)