1. Suppose the equilibrium price for health insurance for a healthy person is $50 per month; and, the equilibrium price for an unhealthy person is $250 per month. Assume consumers of health insurance have perfect information as to their health status but suppliers of health insurance have imperfect information. Assume a seller of health insurance believes the probability that a given consumer is of good health equals .75 and the probability of poor health equals .25.

What is the expected price offered by the seller?

2. Suppose the equilibrium price for health insurance for a healthy person is $50 per month; and, the equilibrium price for an unhealthy person is $250 per month. Assume consumers of health insurance have perfect information as to their health status but suppliers of health insurance have imperfect information. Assume a seller of health insurance believes the probability that a given consumer is of good health equals .75 and the probability of poor health equals .25.

If the seller sells insurance to an unhealthy person, what is the net-benefit to the unhealthy person?

3. Suppose the equilibrium price for health insurance for a healthy person is $50 per month; and, the equilibrium price for an unhealthy person is $250 per month. Assume consumers of health insurance have perfect information as to their health status but suppliers of health insurance have imperfect information. Assume a seller of health insurance believes the probability that a given consumer is of good health equals .75 and the probability of poor health equals .25.

What type of customer ultimately purchases health insurance?