Think about: Yesterday I went into McDonald's and bought items exclusively off the Dollar Menu. Now, I can't possibly believe the Dollar Menu is a loss leader, because half the items people purchase are off the Dollar Menu. However, the profit margin can't be very high. I have no training in economics, but suppose the net profit margin on Dollar Menu items is 5 percent. So, I went into McDonald's, bought two items off the Dollar Menu and McDonald's made 10 cents. How much tax did I pay on the bill? 15 cents. And that's all net profit for the government. So essentially, the government has a net profit margin of 7.5 percent on the McDonald's Dollar Menu, compared to McDonald's own 5 percent.
Who's really winning this game?
Saturday, February 28, 2009
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