When you buy a new phone, Econ Phones asks if you would like to purchase phone protection insurance. Assume "careful" customers (those that use a phone case) costs on average $100 to insure. Assume "careless" customers (those that do not use a phone case) and are more likely to damage their phones cost on average $400 to insure. Individuals know whether they are "careful" or "careless, but Econ Phones in unable to determine different segment classifications. Assume that 25% of the customers are "careless" and 75% are "careful." (5 Points)

a. How much does Econ Phones have to charge in order to prevent a loss? (2.5 points)

b. What could Econ Phones do to lessen adverse selection? (2.5)