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Reply to "Price gouging as her first policy announcement? Really? "
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[quote=Anonymous]NP. Not an economist, and haven't seen it since grade school. For those arguing that this is not price gouging, could you explain why it's not, like you're talking to a 5 year old? Let's say for instance that cost of making a widget is $10.00. This is sold for $20.00, for a profit of $10.00 per widget. Because of increased labor/material cost, say 20%, that price is now $12.00. If they passed the entirety of the $2.00 increase to the consumer, the price increases to $22.00. Again, profit of $10.00 per widget. If this were the case, then the company's profit margins stay the same, and they would report similar earnings as they did previously. So why is it that certain companies are reporting earnings that are well in excess of what they had previously reported (record profits)? If they claim that they raised prices in line with their increased COGS, how would they generate excess profits? [/quote]
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