6/25    What is a commmon ratio between wholesale and normal retail
        prices?  I assume it exists as economic forces would equilize
        widely unequal margins.
        \_ totally depends on the type of goods and their cost
           \_ Margin - cost ratio should be relatively uniform or people
              all flock to trade the ones with higher profit.
              \_ uh, no.  -tom
              \_ You poor idealistic fool.
                 \_ You say what I learned in Econ 1 is wrong?
                    \_ No, I say you don't understand what they were telling
                       you in Econ 1.  Wholesale vs. retail price is only
                       one of many factors in determining profit margin.  -tom
        \_ I think >5% for new cars, 1-2% for groceries.
                \_ I think you are thinking of net not gross.
        \_ If you don't move a lot of volume, you ned a higher markup to cover
        \_ If you don't move a lot of volume, you need a higher markup to cover
           your overhead (think jewelery).  If you move a lot of product
           (milk in grocery stores) or your product is very expensive (cars)
           than you can cover overhead with a smaller margin.
           \_ Is there a place to look up actual stat. for different classes
              of product?
        \_ My mom is in retail (women's clothing) and she normally doubles the
           wholesale cost. She gives her employees 30% off, which is what she
           considers her break-even point.
           \- hello since i am stuck in my office for 45 min ...
              the econ1 is view roughly "in competitive markets rents or
              surplus profits cannot be extracted". this means the return
              on capital is about the same. in other words, what a company
              selling plums or highend stereos makes on a $1m of investment
              isnt going to be too different [as well as the returns at
              different stages of the pipeline ... assuming each stage is
              competitive]. how ever costs != wholesale cost. obviously
              in the case of safeway, s significant portion of the safeway
              price of a tomato is going to be what they are paying their
              supplier. in the case of diamond, there is the advertising,
              in the case of highend stereos, you have to invest more in
              salesmen than you do if you are selling tomatos. naturally
              this is wildly simplified and it's not immediately obvious
              when a mkt is competitive. in fact you may go backwards and
              look to see if excess profits appear to be present somewhere
              as a sign of mkt power ... although i dont know too much about
              econometrics in terms of what can be observed cheeply/accurately
              and with fair preceision. so it may be reasonable to ask what
              the w'sale/retail markup is in some domain [although what that
              domain is isnt clear ... mcdonald probably has larger margins
              on coke and fries than 99cent double cheeseburgers] but that
              is not a "globallly conserved property" ... also it is unclear
              over what large domain you would expect equillibriation ...
              states, nations, world, local markets etc. microecon is the
              basics for this question but then you can do into econometrics
              or IO. IO is pretty interesting.