l4 Imperfect competition and moral hazard Some economists have argued that moral hazard and monopolistic health care markets are two socially inefcient problems that partially cancel each other out. a Relative to the optimal level of health care (2'. how much health care is provided in the presence of moral hazard? Assume perfectly competitive health care markets. h Relative to the optimal level of health care Q". how much health care is provided in the presence of monopolistic health care markets? Assume no moral hazard. c Write a one-sentence defense of the argument that moral hazard and imperfectly competitive health care markets could combine to provide a good level of health care provision Q. d Gaynor and Vogt (2000) contend that this argument is not quite right. Draw your own version of the Pauly tradeoif diagram (Figure 11.8) with a locus of fealble contracts under moral hazard and perect competition in the health care market. Now draw a new focus of insurance contracts under imperfect competition. [Hint Imperfect competition raises price levels, so per- unit premiums will now be higher than before at ever}.r insurance level] e Draw a plausible set of indifference curves that shows the optimal contract under perfect competition A" and the optimal contract under imperfect competition A'. f How would you refute the argument you made in Exercise \"(c)"