c. Suppose instead Susan is purchasing insurance in an adversely selected market. A graph of the amount of insurance (as % of expenses covered) is on the x-axis and premiums are on the Y- axis. The average and marginal costs faced by insurance companies, as well as Susan's demand curve for insurance are also on the graph. Imagine that a tax penalty is going to be applied to Susan if she does not buy enough insurance coverage. Draw on the graph the shifted demand curve such that an optimal penalty was applied, and Susan buys the efficient amount of insurance (ie. all deadweight loss from adverse selection is eliminated). Label as point A on the graph the point representing the efficient price and quantity of insurance that Susan buys under the optimal tax penalty. [10 points] premiums susans Demand Curve A C MC 1. coverage 4