Suppose the equilibrium price for an average hospital stay in the absence of insurance is $10,000. At that price, 1000 people are hospitalized each year. Now suppose an insurer offers a policy to lower the out of pocket price of a stay to $100, and at that price, 1200 people are hospitalized.

Now suppose there are 120,000people near this hospital, all of whom think they have an equal chance (1%)of being hospitalized.What must the per person premium be so the insurer breaks even?