5. Adverse Selection - 10 points There are two kinds of consumers who are looking to buy auto insurance from an insurance firm - Reckless drivers (R) and Safe Drivers (S). 50percent of the consumer population is R and 50 percent is S.The insurance company's cost of servicing a consumer is $ 100if she is a safe driver and $160 if she is a reckless driver. The value of the insurance is $110t0 S and $ 200 to R. a) What is the efficient outcome in terms of who gets insurance? (1 point) b) What is the total surplus? (2 points) Suppose the firm cannot distinguish between reckless and safe drivers. c) If the firm continues to offers a premium that is equal to the average cost of a consumer who will accept the insurance? (1 point) d) What is the expected profit to the firm from offering these premiums? (2 points) ge 9 of 11 e) What will the profit maximizing premium be for the insurance company? (2 points) f) Who will buy the insurance at this equilibrium? (1 point) g) What is the total surplus at this market equilibrium? (1 point)