No. of Recommendations: 1
Why must prices go up? Why can't the companies just make a smaller profit

Becaue making a smaller profit usually shakes up the banks loaning the company money to operate which means credit gets tighter and/or gets more expensive. Banks like to see earnings grow at a regular rate, not drop. Also, if the company is a public one then reduced earnings usually drive down the price of the stock, and while most stock is traded among individuals or institutions the company itself usually has reserves of it's stock that it sells once in awhile to rasie extra cash. Not only that no company wants to see it's stock price drop becasue then it is harder to attract investors if it issues new shares.

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