An insurance company finds that it insured an adverse selection of largely ill patients. It is forced to increase insurance premiums to reduce losses. How does this aggravate the adverse selection problem?
As insurance premiums increase healthy enrollees are more likely to drop out of the plan. They might opt for cheaper, less generous health insurance plans or for self-insurance. This tendency further aggravates the adverse selection problem.
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Ceteris paribus, an increase in the price of a good will cause the
a. quantity demanded of the good to increase. b. quantity supplied of the good to decrease. c. producer surplus derived from the good to increase. d. supply of the good to decrease.
The payoff matrix below shows the payoffs (in millions of dollars) for two firms, A and B, for two different strategies, investing in new capital or not investing in new capital. 
An industry spy comes to firm B and claims to know what firm A has decided. Given that each firm already knows the payoff matrix, how much would this information be worth to firm B?
A. $0. B. $50 million. C. $70 million. D. $30 million.