Originally posted by ODC:


Elasticity has nothing to do with this, and neither is the product. Both corporations are in the business of selling a product.

Corporations work the same way, they sell products at a margin. I'm just illlustrating that although the final value is big, the percentage of profit:revenue is quite small.



Elasticity has a huge amount to do with it from a customer standpoint. There are no subsitute goods for most oil products (gasoline for example), so if price goes up you can only use less. If Microsoft decides they want to charge $1000 for Vista, what will happen? Nobody will buy it, they'll pirate or, switch to linux, or Apple or choose a bunch of other options.

ExxonMobil has huge amounts of fixed costs (tied up in a lot of PP&E) where as Microsoft has a lot more variable costs. You can't compare the industries for a logical argument.

While most Americans don't understand why, they see that Oil companies are making record profits and they are paying record prices. When they put the two together they are understandably pissed.

"Bros before Hoes" <-- More men need this mentality.