Every Consumer Has a Red-Money Income and a Blue-Money Income

question 25

Multiple Choice

Every consumer has a red-money income and a blue-money income and each commodity has a red price and a blue price.You can buy a good by paying for it either with blue money at the blue price or with red money at the red price.Harold has 12 units of red money and 10 units of blue money to spend.The red price of ambrosia is 1 and the blue price of ambrosia is 2.The red price of bubble gum is 1 and the blue price of bubble gum is 1.If ambrosia is on the horizontal axis, and bubble gum on the vertical axis, then Harold's budget set is bounded by

• A)two line segments, one running from (0, 22)to (12, 10)and another running from (12, 10)to (17, 0).
• B)two line segments one running from (0, 22)to (5, 12)and the other running from (5, 12)to (17, 0).
• C)two line segments, one running from (0, 15)to (12, 10)and the other running from (12, 10)to (24, 0).
• D)a vertical line segment and a horizontal line segment, intersecting at (12, 10).
• E)a vertical line segment and a horizontal line segment, intersecting at (5, 12).

Understand the impact of negotiated prices on consumer and producer surplus.

Recognize conditions that make a game cooperative and the effects of such conditions.

Distinguish between cooperative and constant sum games.

Identify and analyze Nash equilibrium in game theory scenarios.

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Definitions:

Heavy Equipment

Refers to large and heavy-duty vehicles designed for construction tasks, most notably earthwork operations.

Wholesale Distributor

A business entity that purchases goods in large quantities from manufacturers and sells them in smaller quantities to retailers or other distributors.

Territorial Restriction

A limit imposed on the area or region where a product or service can be sold or provided.

Price-Cutting

The practice of reducing prices, often below the normal value, to attract customers or undermine competitors.