In order to fully understand the idea of Merit goods, students need to have previously studied the idea of external benefits – the idea that some goods will be demanded too little in the free market because consumers demand on the basis of their private benefits rather than the full social benefit (private benefit plus external benefit). Therefore the free market will tend to under-provide these types of good (hence market failure and welfare loss). One useful scenario in which to explore some of these ideas is the NHS, which is obviously provided free at the point of use. One approach is to show the following short video clips: Ask the students to watch the films then discuss in small groups the relative merits of markets versus state provision in health and then feed back to the class what they think.