On the planet Mungo, they have two kinds of money, blue money and red money. Every commodity has two prices—a red-money price and a blue-money price. Every Mungoan has two incomes—a red income and a blue income. In order to buy an object, a Mungoan has to pay that object’s redmoney price in red money and its blue-money price in blue money. (The shops simply have two cash registers, and you have to pay at both registers to buy an object.) It is forbidden to trade one kind of money for the other, and this prohibition is strictly enforced by Mungo’s ruthless and efficient monetary police.
a. There are just two consumer goods on Mungo, ambrosia and bubble gum. All Mungoans prefer more of each good to less.
b. The blue prices are 1 bcu (bcu stands for blue currency unit) per unit of ambrosia and 1 bcu per unit of bubble gum.
c. The red prices are 2 rcus (red currency units) per unit of ambrosia and 6 rcus per unit of bubble gum.