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

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 40 units of red money to spend and 35 units of blue money to spend.The red price of ambrosia is 4 and the blue price of ambrosia is 5.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, 75) to (7, 40) and the other running from (7, 40) to (17, 0) .
B) two line segments, one running from (0, 42) to (10, 35) and the other running from (10, 35) to (50, 0) .
C) a vertical line segment and a horizontal line segment, intersecting at (10, 35) .
D) two line segments, one running from (0, 75) to (10, 35) and another running from (10, 35) to (17, 0) .
E) a vertical line segment and a horizontal line segment, intersecting at (7, 40) .

Correct Answer:

Verified

Show Answer