Question 2 [3]: Suppose the population is comprised of 3 types of people with the following health care spending habits: Group Number Health Care Spending A. 1,000 1,000 1,000 500 5,000 10,000 C Part A: What is the expected health care spending per year for this population? Part B: Suppose we introduce a managed care option. Uptake of managed care is given by the table below. What is the average health care spending for people who do not switch to managed care? The number who do switch? Group Number Not Switching Number Switching to Managed Care 500 500 B 750 250 900 100

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