Asked by Rukhna Chaudhry on May 29, 2024

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In the economy of Mungo,there is a third person called Ike.Ike has a red income of 90 and a blue income of 25.Recall that blue prices are 1 bcu (blue currency unit) per unit of ambrosia and 1 bcu per unit of bubble gum.Red prices are 2 rcus (red currency units per unit of ambrosia and 6 rcus per unit of bubble gum.You have to pay twice for what you buy, once in red currency, once in blue currency.If Ike spends all of his blue income but not all of his red income, he must consume

A) at least 15 units of ambrosia.
B) at least 15 units of bubble gum.
C) at least 10 units of bubble gum.
D) exactly twice as much bubble gum as ambrosia.
E) equal amounts of ambrosia and bubble gum.

Blue Income

Similar to "Red Income," this term does not have a recognized definition in economics and likely pertains to a specific, non-standard use.

Ambrosia

In mythology, it is the food or drink of the gods, thought to confer immortality, but in a general context, it refers to something very pleasing to taste or smell.

  • Implement microeconomic theories in real-life situations dealing with financial limitations and decision-making.
  • Comprehend the correlation among income, prices, and the amount of consumption in the context of economic choices.
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SM
Sophie McDonaldMay 29, 2024
Final Answer :
A
Explanation :
CIke has 90 rcus and 25 bcus. To spend all his blue income but not all his red income, he must match his spending in both currencies without exceeding 90 rcus and exactly using 25 bcus. The least expensive option in terms of blue currency is ambrosia at 1 bcu, allowing for a maximum of 25 units if only considering blue currency. However, each unit of ambrosia costs 2 rcus, totaling 50 rcus for 25 units, fitting the criteria of not spending all red income. For bubble gum, at 1 bcu each, he could also buy up to 25 units, but since bubble gum costs 6 rcus each, 10 units would cost 60 rcus, which combined with the cost for ambrosia would exceed his red income if he tried to buy equal amounts. Therefore, he can afford at least 15 units of ambrosia (since 30 rcus would be spent on 15 units, leaving room for spending on bubble gum without exceeding his red income) and at least 10 units of bubble gum (since 10 units would cost 60 rcus, and he could still afford this along with the ambrosia without exceeding 90 rcus).