NCEES FE Industrial and Systems Practice Exam 2025 – Comprehensive All-in-One Guide to Conquer Your Engineering Fundamentals!

The concept of a utility curve is fundamental in decision theory, as it helps to quantify and assess the preferences of a decision maker regarding uncertain outcomes. The utility curve, U(x), reflects how a decision maker values different outcomes, where the values on the curve represent the perceived utility of various financial outcomes.

In this scenario, the options present various outcomes that yield different utility values. For a decision maker concerned with maximizing their utility, the choice with the highest utility value is typically preferred. A utility value of zero can be specific in contexts like a loss or a neutral outcome, indicating that the decision maker has neither gained nor lost utility.

Choosing an option with a utility value of zero implies that the decision maker is neutral towards that outcome, potentially due to it being perceived as an acceptable compromise or as a situation that matches their risk profile. This is particularly relevant if the alternatives present either unfavorable gains or significant losses that would diminish the decision maker's overall satisfaction.

In this case, the utility of the other options, which are positive or negative, suggests that they may not align with the decision maker's preferences or risk tolerance as effectively as the zero utility option. Therefore, the decision maker's selection of the option with a utility of zero reflects a strategic alignment with