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- The spillover effect (or externality effect) is a concept in economics related to the impact of a certain decision and the respective action.
Question 1:
The spillover effect (or externality effect) is a concept in economics related to the impact of a certain decision and the respective action. Which situation would involve a spillover effect?
A. The hardware store gets an extra shipment of snow shovels, so they offer a buy one, get one free deal.
B. A neighbour of yours repairs the sidewalk in front of his house, so the overall state of the neighbourhood pavement improves.
C. The cost of magazines rises, so fewer and fewer people subscribe.
D. Termites cause excessive damage to your house, so you must pay to replace the adversely affected areas.
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