8. The Rothschild-Stiglitz Model and Universal Insurance [15 points] Consider a hypothetical country HealthEconomia that has decided to adopt a Bismark model of insurance. Before this decision, the insurance market in that country was depicted by the figure below. There are two types of citizens of HealthEconomia, robust types with a low probability of getting sick and frail types with a higher probability of getting sick. Point E represents their initial endowment, and the dashed lines that intersect at E represent zero-profit lines. The only insurance plans offered were a separating equilibrium at points F and H. Wealth if Sick P Ufrail F H F Wealth if Healthy a) Explain why no insurance company would enter at point G. [2pts] b) Draw your own version of the figure above that includes the indifference curve for the robust types. Be sure to draw it so that the separating equilibrium is valid. [2pts] c) Now suppose that HealthEconomia creates a new health insurance contract at point P and forbids any private insurance contract from offering any other contract. Assume both types of citizens join this contract. Draw another indifference curve for the robust type that also fits this assumption. [2pts]