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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (435690)11/19/2008 1:18:32 PM
From: Road Walker  Read Replies (2) of 1577638
 
But with the price for non fixed costs going down doesn't that present an offset?

But that can lead to a deflationary spiral, with the solid fixed cost a stick in the spokes. If your cost to maintain plant is $100K and your revenue goes down by 50% your plant cost (%) essentially doubles. Yes you are getting your raw materials cheaper but you are also selling less at a cheaper price. Same with employees, a fixed cost unless you start dumping them... which leads to less overall consumption.

This is looking more and more like something more than a recession. Sorry to be negative.
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