QUESTION 5 2 points SaveAnswer Arisk-neutral firm produces chemical products, and its objective is to maximize expected profit. There is a risk that there will be an accident during the production process. and dangerous chemical products will be released into the ocean. polluting the water. To reduce the risk of an accident, the firm can choose Low or High investment in safety. Low Investment in Safety, Cost fort' m= 50 Probability of an Accident = 80% Probability of No Accident =20% gh investment in Safety_ Cost for rm: S150 Probability of an Accident = 20% Probability of No Accident = 80% The Government wants to reduce the risk of an accident. but the Government cannot observe the rm's investment in safety. Therefore there is a moral hazard problem. However. the Government can observe whether an accident occurred or not. So the government decides to create a ne (penalty): if an accident occurs. the firm must pay a fine F to the Government. If an accident does not occurs, then the rm does not have to pay nothing. Compute the minimum fine F that the Government must impose. in order to solve the moral hazard problem and guarantee that the firm will choose the high investment in safety. F2 v