Calculate miss valerie total price effect

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Valerie wants to exercise and has a choice of going to an aerobics class, which costs $3 each time, or to the gym where she can work out with weights; the gym costs $2 per visit. She likes to do some of each type of exercise; that is, the more aerobics she does, the more she enjoys weightlifting, and vice versa. However, she enjoys aerobics, even if she never lifts weights, while weightlifting is fun for her only if she also does some aerobics. The following utility function reflects Valerie's preferences: u = xy + 4x where x is the number of aerobics classes per semester y is the number of visits to the gym for weightlifting per semester. Valerie's budget for exercising is $100 per semester. If the cost of gym per visit changes from $2 to $3. Calculate Miss Valerie's total price effect, substitution, and income effect of the price change.

Reference no: EM133065280

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