1.Now suppose insurance rules are changed to permit a new insurer (B) to enter this marketplace and be allowed to exclude the high risk due to pre-existing condition exclusions while the other incumbent insurer (A) is forced to still charge a community rate (as in the ACA).Assuming loads remain at 20% in long run equilibrium, what would the premiums be in each market, (low risk, high risk)?

a.

$5000, $10,000

b.

$6000, $12,000

c.

$7500, $15,000

d.

$8000, $11,000