please help me figure out this question, thanks.

u .. \\g/ I u \\ .. u, I. J 3. Assume individuals' utility function is U 2 ,5, where C is the amount of consumption in a year. There are two types of people: those at high risk have a 4% chance of an accident, while those at low risk have a 2% chance of an accident. Half of individuals are high risk and half are low risk. Individuals' income is $40,000 per year and a catastrophic accident costs $30,000 in the year of the accident. (a) Calculate the actuarially fair insurance premium for each type, assuming insurance com panies can identify who is high risk and who is low risk. [2 marks] (b) How much will a highrisk and a lowrisk individual be willing to pay for insurance? [2 marks] (:3) Suppose a law is passed requiring that all insurance contracts are priced the same. Insurers are forwardlooking, and know about the composition and preferences of people in the insurance market, but are forbidden from using that information to set prices. What would be the price for insurance, and who would purchase insurance? [2 marks] (d) The government is considering imposing a mandate and a subsidy on top of the law in (c). The mandate charges anyone failing to purchase insurance $100. The subsidy gives anyone purchasing insurance $100 to offset the price of insurance. Under this scheme, what would the price be for insurance and who would purchase it? [2 marks] END