Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Let's Talk About Our Feelings!!! -- Ignore unavailable to you. Want to Upgrade?

To: Brumar89 who wrote (97955)	3/13/2005 11:45:53 PM
From: cosmicforce	Respond to of 108807

<Supply - demand remains in charge of that.> I remember the years that candy bars went from $0.05 to $0.10 to $0.15 to $0.25 as a kid. The reason was sugar prices, which originally contributed about $0.01 to the cost, saw a sudden increase in price. It was a big one. In that couple year period from 1969 to about 1972, the price of sugar went up by about 300%. However, shortly afterward the sugar market returned to just slightly above the old prices; the new price stayed at $0.25. I know how this works. The cost of oil may be $1.00 per unit. If it doubles, then base demand doesn't go down by two but companies maintain their 15% margin even though the marginal cost doesn't rise by 2x, but more like 1.25x for their operations. This is a windfall and we used to tax them. Along the same lines, if we had an outbreak of disease, then the price of medications would rise, and there would be no reason for the costs associated with the production to also rise by the same amount because raw material cost is frequently only a fraction of the selling price. If a medical supply manufacturer was making $100 MM selling them before the crisis was making $300 MM after the crisis, this would be deemed profiteering and could be a federal offence.