22. To what sorts of customers would an insurance company offer a policy with a high copay? What about a

high premium with a lower copay?

Problems

23. Using Exercise 16.20, sketch the effects in parts (a) and (b) on a single supply and demand diagram. What

prediction would you make about how the improved information alters the equilibrium quantity and

price?

24. Imagine that you can divide 50-year-old men into two groups: those who have a family history of cancer

and those who do not. For the purposes of this example, say that 20% of a group of 1,000 men have a

family history of cancer, and these men have one chance in 50 of dying in the next year, while the other

80% of men have one chance in 200 of dying in the next year. The insurance company is selling a policy

that will pay $100,000 to the estate of anyone who dies in the next year.

a.

If the insurance company were selling life insurance separately to each group, what would be the
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