Hulk goes to the gym 20 times a month. His income is $1,000 per month and his visits to the gym cost $4 per visit.
a. Draw Hulk's budget line for visits to the gym and all other goods, show the consumption bundle that maximizes his satisfaction, and draw the indifference curve through that point.
b. Recently, a new health club opened which offers identical facilities but which charges a flat fee of $60 per month plus $1 per visit. Draw Hulk's budget line if he were to join this new club.
c. Would Hulk continue to work out at the gym or would he join the new health club. Why?

Question

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The Answer of Hulk goes to the gym 20 times a month. His income is $1,000 per month and his visits to the gym cost $4 per visit.
a. Draw Hulk's budget line for visits to the gym and all other goods, show the consumption bundle that maximizes his satisfaction, and draw the indifference curve through that point.
b. Recently, a new health club opened which offers identical facilities but which charges a flat fee of $60 per month plus $1 per visit. Draw Hulk's budget line if he were to join this new club.
c. Would Hulk continue to work out at the gym or would he join the new health club. Why?

Hulk Goes to the Gym 20 Times a Month