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To: Wildstar who wrote (324)	11/30/2003 5:12:20 PM
From: Don Lloyd	Read Replies (1) of 445

Wildstar, [Yes. We need to keep in mind here that we are talking about all costs being either sunk or non-interfering with the achievement of the PEAK price. The 'various reasons' of which I am currently aware would include a marginal cost of replacement above the PEAK price and a limitation of available supply that would not satisfy the amount demanded at the PEAK price.] Can you further explain what you mean by 'cost of replacement'? If you're selling a specific lot of widgets, the lot is either the last lot that will be made or there will be another one made. If it is the last lot to be made, then all costs are sunk and the marginal cost has no bearing on how you price it to sell. If the lot will be replaced, then it will be the marginal replacement cost that will determine how much much the revenue maximizing price will be increased. It has something to do with it not making sense to sell a product at a relatively disadvantageous price when I can avoid the replacement cost by keeping it. Historically, in many cases, you have been able to find a clearer set of words to describe what I' m trying to say. I suspect that this may be one of those cases. Regards, Don

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