The Difference Between the Utility of Expected Income and Expected

question 119

Multiple Choice

The difference between the utility of expected income and expected utility from income is:

• A) zero because income generates utility.
• B) positive because if utility from income is uncertain, it is worth less.
• C) negative because if income is uncertain, it is worth less.
• D) that expected utility from income is calculated by summing the utilities of possible incomes, weighted by their probability of occurring, and the utility of expected income is calculated by summing the possible incomes, weighted by their probability of occurring, and finding the utility of that figure.
• E) that the utility of expected income is calculated by summing the utilities of possible incomes, weighted by their probability of occurring, and the expected utility of income is calculated by summing the possible incomes, weighted by their probability of occurring, and finding the utility of that figure.

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