a.What is the most a member of each group would be willing to pay to insure against this loss?
b.If it is impossible for outsiders to discover which individuals belong to which group,how large a share of the potential client pool can the members of group 1 be before it becomes impossible for a private company with a zero-profit constraint to provide insurance for the members of group 2? (For simplicity, you may assume that insurance companies charge only enough in premiums to cover their expected benefit payments and that people will always buy insurance when its price is equal to or below their reservation price.) Explain.
Dear Student, I have reviewed your assignment thoroughly, based on your assignment details and current... View the full answer