Question 1

There are 50 low-risk people in a town and 50 high-risk people. A low-risk person has an average of \$500 in medical expenses each year and is willing to pay \$800 for medical insurance (this person is risk averse). A high-risk person has an average of \$1,200 in medical expenses each year and is willing to pay \$1,500 for medical insurance. Insurance companies are unable to differentiate who is high-risk and who is low risk.\ Based on the above data, answer the given subquestions. If the insurance provider offered medical insurance at a price of \$1,000 There are 50 low-risk people in a town and 50 high-risk people. A low-risk person has an average of \$500 in medical expenses each year and is willing to pay \$800 for medical insurance (this person is risk averse). A high-risk person has an average of \$1,200 in medical expenses each year and is willing to pay \$1,500 for medical insurance. Insurance companies are unable to differentiate who is high-risk and who is low risk.\ Based on the above data, answer the given subquestions. If the insurance company offered medical insurance at a price of \$1,300 A beekeeper lives adjacent to an apple orchard. The orchard owner benefits from the bees because each hive pollinates about one acre of apple trees. The orchard owner pays nothing for this service, however, because the bees come to the orchard without him having to do anything. Because there are not enough bees to pollinate the entire orchard, the orchard owner must complete the pollination by artificial means, at a cost of \$10 per acre of trees.\ Beekeeping has a marginal cost *MC* = 10 + 5*Q*, where *Q* is the number of beehives. Each hive yields \$40 worth of honey.\ Based on the above data, answer the given subquestions. What should be the socially efficient number of hives that the beekeeper should maintain \_\_\_\_\_\_\_\_\_