$.$ Suppose that your utility function over health care$($h$)$ and other goods $($c$)$ is given by U$($h$,$ c$)$ and that you have a fixed

income of $$100.($Assume that the indifference curves of your utility function bear the usual convex shape$).$ Each year,

you choose h and c to maximize your utility subject to a budget constraint:

phh $+$ pcc $=$ Y

where, ph is the price of health care, pc is the price of other goods, and Y is your income.

In year $1,$ the price of health care is $$1,$ while the price of other goods is $$2.$ At these prices, you demand $30$ units of

health care and $35$ units of other goods.

In year $2,$ your utility function and your income do not change, but prices do$.$ Health care becomes more expensive at

$$1\mathrm{.}50,$ while other goods become cheaper at $$1\mathrm{.}50.$ At these prices, you demand $20$ units of health care.