atomic_fungus (atomic_fungus) wrote,

Energy Costs--Addendum 1

Neal Boortz gives an excellent example on his web site:

"Let's say that you're selling a widget for $10 and you're making a 10% profit. Your profit is $1.00. Your profit margin is 10%. Now let's say that your costs go up by $9 a widget. So, you double the price at the widget store. Now widgets are selling for $20. Your costs are $18 per widget, so you're making $2.00 on every sale. Your profit has doubled to $2.00 per widget, but your profit margin is still 10%. You're still making the same profit on every dollar that you invest in your business, but your profits have doubled! So ... as surely as wet streets follow rain ... along comes the politician to demagogue you for doubling your profits. He starts to talk about a windfall profits tax to take that extra dollar away from you."

The politician starts to talk about how you are making "record profits", too.

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