In the economy of Mungo, discussed in your workbook, there is a third person called Ike.Ike has a red income of 92 rcus and a blue income of 20 bcus.(Recall that red prices are 2 rcus [red currency units] per unit of ambrosia and 6 rcus per unit of bubble gum.Blue prices are 1 bcu [blue currency unit] per unit of ambrosia and 1 bcu per unit of bubble gum.You have to pay twice for what you buy, once in red currency and once in blue currency.)If Ike spends all of his blue income but not all of his red income, then he consumes
A)at least 13 units of bubble gum.
B)at least 7 units of ambrosia.
C)exactly twice as much bubble gum as ambrosia.
D)at least 17 units of bubble gum.
E)equal amounts of ambrosia and bubble gum.

Question

Quizplus · Accepted Answer

To determine how much Ike can consume, we need to convert his incomes into the same currency unit, say red currency.

92 rcus (red income) + (20 bcus x 2 rcus/bcu) = 132 rcus

This means Ike has a total of 132 rcus to spend.

Let's find out how much he has to spend on bubble gum:

132 rcus / 6 rcus per unit of bubble gum = 22 units of bubble gum

Now, let's find out how much he has to spend on ambrosia:

132 rcus / 2 rcus per unit of ambrosia = 66 units of ambrosia

Since Ike spends all of his blue income but not all of his red income, he must have spent:

20 bcus x 1 rcu/bcu = 20 rcus

This leaves him with:

132 rcus - 20 rcus = 112 rcus

So, Ike has at least 17 units of bubble gum left to consume (112 rcus / 6 rcus per unit of bubble gum = 18.67 units, round down to nearest whole number), which means the best choice is D: at least 17 units of bubble gum.

In the Economy of Mungo, Discussed in Your Workbook, There