Is there ever a time when companies make 'too' much profit?

Question

Given all the great products and services developed as people and companies are striving for profit, is there ever a time when companies make 'too' much profit?

Answer 1

Not in a perfectly competitive market economy. Unfortunately this capitalist utopia does not exist. As an answerer above states, when profits roll in, firms enter the market and drive prices down iff (if and only if) we are in a perfectly competitive market state.
There never has been such a beast. Imperfect information, monopoly, oligopoly etc. exist. Given the profits of the oil companies there should be at least a couple hundred new oil companies, but I look around and .... nope. Given the huge profits of the pharmaceutical, insurance, banking industries there should be competition a plenty.... nope.

That's why government has to get in on the act and make sure that profit taking is not excessive.

Peace

Answer 2

Normally when companies make too much profit, other companies start up to get on the gravy train. This is competition. The proftable companies lower their prices to try to starve out the startup companies. Start up companies buy each other out to be able to grow and take on the first companies.. This is the free market system at it's best. As long as a company or group of companies can not operate as a monopoly, competition keeps profits where they should be.

Answer 3

good question! the answer: YES! LOOK AT THE OIL COMPANIES PROFTIS FOR 2005-2006! unbelievable! exxon for example, made profit of 200- 300 billion dollars! their CEOS GOT AVERAGE BONUSES OF 50- 100 MILLION!! DOLLARS EACH! no wonder congress got involved, and wanted to punish some of these greedy oil companies! they are the worst example, the oil companies, but the computer companies are getting just as bad! yes, these people make too! much in profits! but it is up to the consumer to do something about it! do not support such companies! problem with what i just said, is the oil companies have us at their mercy until congress gets involved and cuts their profit ratios!

Answer 4

There is no such thing as "too much profit". It is completely subjective.

If the federal government can take $2.3 Trillion from the American people, then $10 Billion profit is pocket change compared to that.
.