Adverse Selection and Health Insurance 1) Suppose that 70% of the population is generally \"healthy\" and 30% of the population is \"unhealthy\". There is a 20% chance that a person gets sick whether they are \"healthy\" or \"unhealthy.\" The cost associated with an illness for a healthy individual is $600, but for unhealthy individuals it is $10,000. Consider the situation in which the insurance company offers actuarially fair insurance that will cover all expenses of an illness (so either $600 or $10,000). The insurance company makes no expected prots (so in expectation it charges premiums to cover its expected costs). We will also assume that both healthy and un-healthy people are risk neutral. A) If all people in the population buy insurance, what would be the actuarially fair price or premium? B) Would healthy people want this insurance? C) If only unhealthy people buy the insurance, what would be the actuarially fair premium