20-4 Auto Insurance Suppose that every driver faces a 1% prob- ability of an automobile accident every year. An accident will, on average, cost each driver $10,000. Suppose there are two types of indi- viduals: those with $60,000 in the bank and those with $5,000 in the bank. Assume that individuals with $5,000 in the bank declare bankruptcy if they get in an accident. In bank- ruptcy, creditors receive only what individuals have in the bank. What is the actuarially fair price of insurance? What price are individuals with $5,000 in the bank willing to pay for the insurance? Will those with $5,000 in the bankvoluntarily purchase insurance? What is the effect of state laws forcing individuals to pur- chase auto liability insurance