Isn't this $5 extra you're overcharging the consumer, because inflation would affect the supply chain as well. 25% would raise cost of production to $100, keep your profit at $20 and cost to consumer will rise to $120.
Of course, demand on a widget might rise or fall during inflation too.
Isn't this $5 extra you're overcharging the consumer, because inflation would affect the supply chain as well. 25% would raise cost of production to $100, keep your profit at $20 and cost to consumer will rise to $120.
Of course, demand on a widget might rise or fall during inflation too.