Bring a large pot of salted water to a boil. Add the macaroni and cook until just tender. Drain the pasta in a colander and set it aside while preparing the cheese sauce.

Place a large saucepan over medium heat. Add the butter and let it melt completely. Stir gently to prevent browning. The melted butter creates the base for the creamy sauce.

Sprinkle the flour into the melted butter. Whisk constantly for about two minutes. The mixture should become smooth and slightly golden. This step helps create a thick and silky cheese sauce.

Slowly pour the milk into the roux while whisking continuously. Keep stirring to avoid lumps. Cook for several minutes until the mixture thickens and becomes smooth and creamy.

Add the dry mustard powder, salt and black pepper. Stir well so the seasonings blend evenly throughout the sauce. These simple ingredients add depth and balance to the rich cheese flavor.

Place the beaten egg in a small bowl. Add a few spoonfuls of the warm sauce while whisking. Then slowly stir the egg mixture back into the saucepan. This prevents the egg from scrambling.

Reduce the heat to low. Add the cheddar and Monterey Jack cheese gradually. Stir until fully melted. The sauce should become thick, creamy, and packed with delicious cheesy flavor.

Add the cooked macaroni to the cheese sauce. Stir gently until every piece of pasta is coated. The pasta should be completely covered in the rich and creamy cheese mixture.

Pour the macaroni and cheese into a lightly greased baking dish. Spread it evenly using a spoon. Sprinkle paprika across the top for extra color and flavor.

Bake in a preheated 350°F (175°C) oven for about 20 minutes. The top should look slightly golden and bubbly. Remove from the oven and let it rest briefly before serving.