In the economy of Mungo, there is a third person called Ike.Ike has a red income of 104 and a blue income of 30.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 19 units of ambrosia.
B)at least 11 units of bubble gum.
C)exactly twice as much bubble gum as ambrosia.
D)at least 21 units of bubble gum.
E)equal amounts of ambrosia and bubble gum.

Question

Quizplus · Accepted Answer

To spend all of his blue income (30 bcu), Ike can buy a combination of ambrosia and bubble gum since both cost 1 bcu each. However, to minimize red income spending while maximizing the number of units bought, Ike would prefer ambrosia over bubble gum because ambrosia is cheaper in red currency (2 rcus) compared to bubble gum (6 rcus). Therefore, with 30 bcu, Ike could buy up to 30 units of ambrosia, but since he must also pay in red currency and not spend all of it, the maximum he can buy without exceeding his red income (104 rcus) would be 52 units (104 rcus / 2 rcus per unit of ambrosia). However, since he is limited by his blue income to 30 units, and he must spend all of it, the maximum he can buy is 30 units. The statement says "at least 19 units of ambrosia," which is true because he can afford more than 19 units with his blue income but chooses to spend all of it, which allows for a maximum of 30 units. This makes option A correct without implying he would buy exactly 30 units, just that he can buy at least 19 units based on his income constraints.

In the Economy of Mungo, There Is a Third Person