10. Consider the figure below depicting the Rothschild-Stiglitz model as seen in class. Sick ZPL L...

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10. Consider the figure below depicting the Rothschild-Stiglitz model as seen in class. Sick ZPL L ZPL H B A H E Healthy a) Is (A, B) a pooling or separating equilibrium? b) Suppose the economy has 95% low risk types and 5% high risk types. Draw the average zero profit line. c) What happens to the proposed equilibrium (A, B)? Explain why? 10. Consider the figure below depicting the Rothschild-Stiglitz model as seen in class. Sick ZPL L ZPL H B A H E Healthy a) Is (A, B) a pooling or separating equilibrium? b) Suppose the economy has 95% low risk types and 5% high risk types. Draw the average zero profit line. c) What happens to the proposed equilibrium (A, B)? Explain why?