Question

Briefly discuss (200+words) the accuracy of the following statement: "Corporate profits are much too high: Most corporations make profits equal to 50 percent of the price of the products they sell."

Answer 1

Yes, Corporate profits are much too high. Corporate profits are highest in last 85 years and the employee wages are lowest in 65 years. In the US economy, corporate profit is a large component. The corporate profit is almost double as large as wages. As per December 2017 reports, "gross domestic income was equal to 9.5% of GDP vs. the long-term average since 1950 of 6.6%".

To arrive at the product cost, two major components are labor and material. The labor costs have been declining as discussed and material costs have stabilized. The product selling price keeps on increasing as per the inflation rate and hence with costs down, corporations are able to make profits equal to 50% of the price of products they sell.