In the Economy of Mungo,there Is a Third Person Called

question 24

Multiple Choice

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.

---

Definitions:

AVC

Average Variable Cost; the total variable costs divided by the quantity of output produced.

ATC

Average Total Cost, which is the total cost divided by the quantity of output produced, representing the per-unit production cost.

Marginal Product

The additional output derived from the addition of one more unit of a variable input, holding all other inputs constant.

Marginal Cost

refers to the increase in cost when producing one additional unit of output.