2.) Consider the following scenario: Joes initial income Y is $10,000. Joe experiences illness with a probability of 20%. Joes total medical costs associated with the illness are $1000. What is the actuarially fair premium?

3.)Consider the following scenario: Joes initial income Y is $10,000. Joe experiences illness with a probability of 20%. Joes total medical costs associated with the illness are $1000. What is the amount of medical coverage he should buy?

4.)Consider the following scenario: Joes initial income Y is $10,000. Joe experiences illness with a probability of 20%. Joes total medical costs associated with the illness are $1000. If Joe must pay a premium of $300 for insurance (i.e., 0% coinsurance rate, no deductible), what is the loading fee? Note: a loading fee is the premium charged by an insurance company to cover its administrative and maintenance costs.