19. (6 points) Adverse selection in old-age insurance a) (4 points) Describe how the adverse selection problem affects the market for old-age insurance using the graph below. Be sure to label the demand (D), average cost (AC), and marginal cost (MC) curves, as well as the market equilibrium E, and the efficient allocation, A. Fraction Covered b) (2 points) Does government-mandated social security make this market more efficient? Depict on the graph who loses from government-mandated insurance? (HINT: This is a little subtle.) 9 19. (6 points) Adverse selection in old-age insurance a) (4 points) Describe how the adverse selection problem affects the market for old-age insurance using the graph below. Be sure to label the demand (D), average cost (AC), and marginal cost (MC) curves, as well as the market equilibrium E, and the efficient allocation, A. Fraction Covered b) (2 points) Does government-mandated social security make this market more efficient? Depict on the graph who loses from government-mandated insurance? (HINT: This is a little subtle.) 9