UST ANSWER SUBPART 1 There are two individuals, Individual A and Individual B. Individual A has an income (Y) of 500 million Rupiah per year. If Individual A is sick, he will lose 25% of his income. Meanwhile, Individual B has an income (Y) of 100 million Rupiah per year, and if Individual B is sick, he will lose 75% of his income. The probability of Individual A and Individual B being sick is the same, which is 10%. If the satisfaction level of Individual A and Individual B is determined by their income level, based on the following function U(Y)=ln Y, would Individual A and Individual B prefer not to have health insurance? Explain Faced with fair actuarially insurance, how much premium is offered to Individual A? Is the premium rate offered the same for Individual B? Explain with the support of graphic illustrations. The government decides to provide compulsory health insurance with a premium rate for Individual A and Individual B, which is 2% of the income of each individual. In this case, the government will fulfill 80% of the claims, with the remainder being co-payments from the individual concerned, how much is the subsidy borne by the government and which groups (if any) receive these subsidies? Explain with the support of graphic illustrations.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.15P

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JUST ANSWER SUBPART 1

There are two individuals, Individual A and Individual B. Individual A has an income (Y) of 500 million Rupiah per year. If Individual A is sick, he will lose 25% of his income. Meanwhile, Individual B has an income (Y) of 100 million Rupiah per year, and if Individual B is sick, he will lose 75% of his income. The probability of Individual A and Individual B being sick is the same, which is 10%.

If the satisfaction level of Individual A and Individual B is determined by their income level, based on the following function U(Y)=ln Y, would Individual A and Individual B prefer not to have health insurance? Explain
Faced with fair actuarially insurance, how much premium is offered to Individual A? Is the premium rate offered the same for Individual B? Explain with the support of graphic illustrations.
The government decides to provide compulsory health insurance with a premium rate for Individual A and Individual B, which is 2% of the income of each individual. In this case, the government will fulfill 80% of the claims, with the remainder being co-payments from the individual concerned, how much is the subsidy borne by the government and which groups (if any) receive these subsidies? Explain with the support of graphic illustrations.

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