Use moral hazard and risk aversion to describe

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1. Imagine the lake in your small community, which brings lots of tourist dollars to the community, becomes polluted. In order to keep tourists coming, the government levies an equal payment from each resident in order to cover the cost of the clean-up. Discuss two (2) pros and two (2) cons to this solution. Are you in favor of the government's action?

2. In your opinion, discuss when it makes sense to forego purchasing car insurance (assuming the state did not require it). In your answer, use moral hazard and risk aversion to describe your decision.

Reference no: EM13215010

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