Use the following to answer questions:
-(Table: Natasha's Total Utility) Look at the table Natasha's Total Utility. Natasha earns $50,000 per year but faces losing $20,000 of it if she is late with her work. If there is a 25% probability that Natasha will be late with her work and her income will then equal $30,000, her expected income is:
A) $32,500.
B) $38,200.
C) $40,500.
D) $45,000.

Question

Use the following to answer questions: 
-(Table: Natasha's Total Utility) Look at the table Natasha's Total Utility. Natasha earns $50,000 per year but faces losing $20,000 of it if she is late with her work. If there is a 25% probability that Natasha will be late with her work and her income will then equal $30,000, her expected income is:
A) $32,500. 
B) $38,200. 
C) $40,500. 
D) $45,000.

Quizplus · Accepted Answer

The expected income is calculated by multiplying each possible outcome by its probability and summing the results: (0.75 * $50,000) + (0.25 * $30,000) = $45,000.

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