7. Suppose that Annie's loss distribution is as follows: S5,000 with probability 0.004 $1,000 with probability 0.006 Loss $ 250 with probability 0.055 $0 with probability 0.935 W1 Assume that the only administrative cost is the cost of processing a claim, which equals $500 regardless of the claim size. Ignoring moral hazard, adverse selection, the time value of money, and capital costs, the cost of providing insurance is the sum of expected claim costs and expected claim processing costs. Fill in the table below for a policy with a $250 deductible and a policy without a deductible. What does the table illustrate about the marginal cost of insuring small losses and the desirability of deductibles? Policy withPolicy with a $250 Implicit cost of full coveragedeductible coverage for $250 Expected claim costs Expected claim processing cost (a) +(b) Fair premium