Edward, Emma and Liam are currently employed, however, if they lose their job, they each have an expected loss of $50,000. Edward faces a 20% probability of getting fired, while Emma faces a 15% probability of getting fired and Liam faces a 5% probability of getting fired.

1. A) Calculate the actuarially fair insurance premium if insurance is compulsory and the insurer cannot distinguish between individuals.

2. B) If insurance is not compulsory, will all individuals purchase insurance if premiums are actuarially fair? Why or why not? NOTE: Assume the premium is reflective of all 3 individuals purchasing insurance (as in part a).

3. C) Determine who will purchase insurance and, if insurance rates are actuarially fair, what the premium will be.

4. D) Explain the positive (or descriptive) economics argument for the public provision of employment insurance.