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A negative externality or spillover cost occurs when?
teh total cost of producing a good exceeds the costs borne by the producer
What is spillover cost?
Spillover costs (Negative externality):nproduction or consumption costs inflicted on a third party without compensation nExample: environmental pollution Spillover benefits (Positive externality):nproduction or consumption of certain goods and services may confer external benefits on third party or the community at large without compensating payment nExample: education
What are spillovers?
A spillover is an instance of overflowing or spreading into another area.
What is the following example of spillover costs?
In a water treatment plant, the place your drinking water comes from, they use a spillover to areate the water. After the water is purified in the treatment plant it goes into a large lake with a small waterfall or spillover that allows the air to mix with the water which gives it a better taste.
Costs of a production that affect people who have no control over how much of a good is produced?
spillover cost
