1. Consider moving from no health insurance to partial health insurance. On an appropriate diagram show:

The effect on total medical expenditures. Indicate it clearly on the graph.

The welfare loss due to moral hazard. Indicate it clearly on the graph.

On an appropriate diagram show the benefit of health insurance for a risk-averse consumer. Provide an explanation of your diagram, do not just draw it.

2.On an appropriate diagram show what happens to the optimal level of health if one is diagnosed by an irreversible degenerative disease. (hint: use MEC degenerative disease deteriorate health you are allowed to google it if you wish)