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05-15-2013, 02:00 PM
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Join Date: Dec 2011
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I think a better example that people can relate to is car purchases.

You have $25,000 for a new car. You don't care how that money is divided between government taxes/dealer fees/commission/manufacturer cut. Your goal is to get a car for $25,000 or less. Doesn't matter if theres a billion cars available to buy of the same kind, if the cost is still more than $25,000, your not getting it (until supply curve hugely beats out demand curves and the dealer just needs to get rid of it to get anything back and recover costs).

So, dealer fees could be 90% of the cost, and manufacturer 1% of the cost, meaning most money goes to the dealer, and you don't care. Its still $25,000 and thats the bottom line for your purchase regardless of what they do with that money.

fysloc is offline