Consider a standard health insurance policy with a premiumr =$100 and a payout ofq =$500.

(a)If your healthy-state income isYH=$500, your sick-state income isYS=$50, and your probability of illness isp =0.1, is the standard contract full and actuarily fair? What is your final income if you get sick?

(b)IfYH= $1,000andYS=$0 with a probability of illnessp =0.2, is the standard contract full and fair?