Uncertainty about the costs of disposing of the waste

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Assume there is uncertainty about the costs of disposing of the waste: There is a fifty-fifty chance that they will be $10,000 or #30,000. Discuss how this uncertainty affects the cost-benefit calculation, if the government is risk neutral, that is , it requires no risk premium to compensate it for bearing risk; if it is very risk averse, that is, if it requires a large risk premium to compensate it for bearing risk.

Reference no: EM131173842

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