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Some Health Insurance Company wants to sell a health insurance product for $700 per month.There is no requirement for healthy people to have insurance coverage.The company conducts a survey to see how different populations respond to the proposed cost.People with no illnesses and disabilities, generally the young and healthy, respond that they don't spend $700 in an entire year, and most feel that they would not waste so much money on premiums when the chance of needing surgery or expensive healthcare treatments is so small.However, older, sicker people think that $700 per month is a great deal, as most of them spend far in excess of this amount on healthcare.It seems like a good deal for them.

a)If the company offers this product, how will adverse selection affect it?

b)What will happen to the costs of the health insurance if only the older, sicker people enroll?