Wholesale Price increase

I found this article and thought that it was interesting. It says that wholesale prices are up due to an increase in the fixed costs. "The real question is whether companies will squeeze their profit margins as costs increase or if they are going to increase prices." It will be the decision of the company leaders to whether they will raise prices or cut costs in other areas. I think that cutting cost will need to be the answer since the market is so competitive in today's economy.

1 comment:

Dr. Tufte said...

Ethan has found a prisoner's dilemma and doesn't realize it. If firms could collude they'd agree to pass cost increases on to consumers. But they can't for the most part, which means that it will end up eating into profit margins for most of them.