If the Government Subsidizes an Activity It Believes Is Generates

question 16

True/False

If the government subsidizes an activity it believes is generates a positive externality and it really only produces an inframarginal positive externality then the subsidization will result in an overproduction of the activity in question.

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Definitions:

Short-Term Disability Insurance

Insurance that pays a percentage of a disabled employee's salary as benefits to the employee for six months or less.

Disabled Employee

An employee who has a physical or mental impairment that substantially limits one or more major life activities.

Minimum Period

The shortest allowable or required duration for a particular action, event, or condition to take place or remain in effect.

Consolidated Omnibus Budget Reconciliation Act

A federal law providing individuals and their families the option to continue health care coverage under their group health plan in certain instances where coverage would otherwise end.