A competitive insurance industry sells insurance to two kinds of individuals: go

A competitive insurance industry sells insurance to two kinds of individuals: good and bad risks. Assume that there are 1000 individuals of eachkind. A good risk individual is willing to pay MBG= 20 for coverageand the marginal cost of serving this individual is MCG= 10. Regardingbad risks we have that MBB= 50 and MCB= 40.(a) Assuming that insurance companies can distinguish among good andbad risks and that they can charge different premium to each kindof individual what prices will they charge and who would buy insurance?(b) Assuming now that insurance companies cannot distinguish amonggood and bad risks so they are forced to charge the same premium toeverybody determine the market price and the quantity of insurancesold? Who buys?(c) Answer parts (a) and (b) for the case in which MBB= 30 whileeverything else is as above.(d) Explain the economic intuition behind the above results.