Figure 9.6 -Figure 9.6 Represents the Market for Health Insurance. Suppose There

Multiple Choice

Figure 9.6
-Figure 9.6 represents the market for health insurance. Suppose there are two types of consumers, low-cost consumers with $2,000 average medical expenses per year, and high-cost customers with $4,000 average medical expenses per year. The insurance companies estimate that 40% of its customers are high-cost type. If the insurance companies set the price equal to their average cost per customer, what is the insurance companies' average cost per customer ($Y) ?

A) $4,000
B) $3,400
C) $2,800
D) $2,000