Tuesday, November 29, 2005

Blindly Making Money

Critics of capitalism make a baseless (and spineless) accusation against businesses: profiteers are out to blindly make money.

Wrong.

If it costs a manufacturer $30 each to produce a particular radio model, and it is assumed that if 500 radios are produced, all will be sold, what must be the selling price per radio to ensure that the profit (revenue from sales minus total cost to produce) on the 500 radios is greater than $8,200?

With basic algebra, the answer comes out to > 46.40.

You know who else tries to figure out money-making in this fashion? How about every applicant to any job out there. Job seekers ask such questions as, how much does the job pay, what are the costs involved, or what do I give up should I take this job for such and such pay?

Unsurprisingly, employers and employees think the same way about how to make money.

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