Adam faces a 50% probability of an income of $100,000 (point B) and a 50% probability of an income of $36,000 (point A). Therefore, his expected income is $68,000 and his expected utility is 8 (point C). A certain income of $64,000 also gives Adam a utility of 8 (point E). Because Adam is risk-averse, he is willing to give up as much as $4,000 in expected income (the distance from point C to point E) to have a certain income of $64,000 instead of his uncertain income.