A = Event that we pick 7 blue balls
First, we choose 7 of the m blue balls: $ \binom{m}{7} $
The first ball has 7 choices, the second ball has 6 choices, the third ball has 5 choices, and so on until the seventh ball has 1 choice: $ 7! $
$ |A| = \binom{m}{7} \cdot 7! $
B = Event that we pick 7 red balls
First, we choose 7 of the n red balls: $ \binom{n}{7} $
The first ball has 7 choices, the second ball has 6 choices, the third ball has 5 choices, and so on until the seventh ball has 1 choice: $ 7! $
$ |B| = \binom{n}{7} \cdot 7! $
$ |A| + |B| = \binom{m}{7} \cdot 7! + \binom{n}{7} \cdot 7! $