26. As part of its "Healthy Hearts" initiative, the territorial government of Norstrilia provides
subsidies/rebates for purchases of healthy foods.
The government rebates half the price of designated healthy foods, to a maximum of $30
per week. (E.g., if a consumer buys $60 of healthy food, the government gives back $30; if
the consumer buys $50 of healthy food, the government gives back $25.)
The maximum subsidy per week is $30.
The price of a unit of healthy food, $P_H$, is $1 (before subsidy) and the price of other goods,
$P_C$, is $1
Rudy, a citizen of Norstrilia, has a budget of $100 per week to spend on healthy foods (H)
and other consumption goods (C).
Rudy's utility function is Cobb-Douglas: $U(H,C) = H \cdot C^3$.
At the optimum, how many units of healthy food, H, will Rudy buy?
a. Rudy will buy fewer than 50 units of healthy food.
b. Rudy will buy 50 units of healthy food.
c. Rudy will buy more than 50, but fewer than 60, units of healthy food.
d. Rudy will buy 60 units of healthy food.
e. Rudy will buy more than 60 units of healthy food.
