Suppose that there is no wage penalty for obesity at the Springfield Nuclear Power Plant (SNPP). Suppose further that Mr Burns (the boss) offers his employees generous pooled health insurance coverage. Finally, suppose that obese workers at the SNPP are likely to spend more on health care than their thinner colleagues. Without further assumptions, one can conclude that Homer Simpson’s gluttony and sloth necessarily causes a large welfare loss.

Indicate whether each statement is true or false, and justify your answer.