Question

The expected sum of the profits over the lifetime of a job (from when the job is filled until it is destroyed) is:___.

Answer 1

The expected sum of the profits over the lifetime of a job can be calculated by multiplying the revenue generated per unit of time by the number of units of time the job is expected to last.

Step-by-step explanation:

The expected sum of the profits over the lifetime of a job can be calculated by multiplying the revenue generated per unit of time by the number of units of time the job is expected to last. In this case, a worker can produce two widgets per hour and each widget can be sold for $4. So, the revenue generated per hour is $8. If we assume the job will last for a certain number of hours, say n, then the expected sum of profits is $8n.

Answer 2

The expected sum of the profits over the lifetime of a job is the present discounted value of all future cash flows from that job minus associated costs. Variables such as government policies and personal saving strategies can influence an individual's lifetime profits. Calculation of this sum involves discounting future revenues by a specific rate to ascertain their present value.

Step-by-step explanation:

The expected sum of the profits over the lifetime of a job is the present value of all future cash flows that can be attributed to that job, after accounting for expenses. For instance, if a worker produces two widgets per hour and each widget can be sold for $4, the firm makes $8 in revenue per hour. However, the employer will only pay the worker up to $8 per hour, which is the maximum value the worker generates for the firm. The concept of 'profit' here entails all such earnings minus the cost of labor and other expenses over the job's life.

When considering government benefits and policies that affect income and work hours, the end profit might be influenced by factors such as taxes, subsidies, and social security support. Moreover, the life-cycle hypothesis suggests that individuals might save a portion of their earnings for retirement, making the calculation of lifetime profits more complex and individual-specific.

To arrive at the sum of expected profits, one might use the present discounted value calculation, considering the estimated time period over which the job will last and applying an appropriate discount rate to future earnings.