Joe Bob from Problem 12 Has a Cousin Ike Who

question 11

Multiple Choice

Joe Bob from Problem 12 has a cousin Ike who consumes goods 1 and 2. Ike thinks that 4 units of good 1 is always a perfect substitute for 2 units of good 2. Which of the following utility functions is the only one that would not represent Ike's preferences?

• A) U(x₁, x₂) = 2x₁ + 4x₂ + 1000.
• B) U(x₁, x₂) = 4x²₁ + 16x₁x₂ + 16x²₂.
• C) U(x₁, x₂) = min{ 2x₁, 4x₂}.
• D) U(x₁, x₂) = 20x₁ + 40x₂ - 10,000.
• E) More than one of the above does not represent Ike's preferences.

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Definitions:

General Purpose Machines

Machines designed to perform a variety of tasks, as opposed to specialized machines which are designed for a specific task.