Do only 6/b

6. Suppose there are 3 potential states of the world. If you purchase an insurance policy with a coinsurance rate of C = 10%, then in state 1 your total medical bill is $200, in state 2 your total medical bill is $100, and in state 3 you are totally healthy so don't consumer any health care. a. How much of the bill does the insurance company pay on your behalf in each of the 3 states of the world? (Here I want you to give me a specic dollar amount for each state of the world, so 3 numbers.) (7 points) b. Now suppose the probability of state 1 occurring is 20%, the probability of state 2 occurring is 30%, and the probability of state 3 occurring is 50%. What is the expected benet associated with the policy? (Another way to ask this is: what is expected cost to the insurance company from selling you this policy?) (7 points) c. If the insurance company charges a loading fee L = 20% what premium would they charge for this policy, given your answer to part b? (7 points) (1. If your marginal tax rate t = 25%, how much will you save in taxes at the end of the year if you buy this policy through your employer, given your answer to part c? (7 mints}