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Suppose we have two individuals in an insurance market: A and B. A has higher expected costs than B. The insurance company knows that there

Suppose we have two individuals in an insurance market: A and B. A has higher expected costs than B. The insurance company knows that there is one of each type but cannot tell which type is which. There are no mandates or other regulations in the market. Can the insurance company offer one contract that breaks even and insures both types? Explain.

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