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4. Adverse Selection Questions a. Sketch a graph of what the insurance market equilibrium looks like if health status is PUbL'l information and there are
4. Adverse Selection Questions a. Sketch a graph of what the insurance market equilibrium looks like if health status is PUbL'l information and there are no regulations on prices other than the fact that the insurance market is perfectly competitive. (7 points) b. Explain using a graph and E111\" own words why a pooling equilibrium will not hold when health status is private information. (7 points) c. Sketch a graph of a situation where a separating equilibrium exists and explain in your words why it holds. (7 points}
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