Problems managing factories

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But if I import timber for 5$, then my lumber mill manufactures it to lumber (WM price 15$ - price of used timber 5$ = 10$ profit for me) and then I let manufacture this lumber to paper (WM price of paper 50$ - cost price of lumber 5$ (since i provide it myself, i have only to pay the timber) = 45$ profit). This would be the way in real life(ok, ok, i would have to pay my workers and taxes, and transport etc. ) .
I don't understand how the machanics work in the game. Does the lumber mill sell it's lumber to the WM first so the paper mill has to pay the full price for lumber? It would make sense just adding the profits of all factories then...

In your example market price for timber is £5, for lumber £15 and for paper £50. Granted that, for simplicity, all factories have one unit input and one unit output factoru profits will show: timber RGO £5, because this is a final good, lumber mill £10 because it sells at £15 but uses £5 for production, paper mill £35 because it sells at £50 and uses £15 worth of lumber (assuming that only lumber is needed for producing paper, i.e production flow is timber>lumber>paper) in the process. The displayed factory profit is merely added value. The mechanics of production are just as easy, really.

 

[bip]

In your example market price for timber is £5, for lumber £15 and for paper £50. Granted that, for simplicity, all factories have one unit input and one unit output factoru profits will show: timber RGO £5, because this is a final good, lumber mill £10 because it sells at £15 but uses £5 for production, paper mill £35 because it sells at £50 and uses £15 worth of lumber (assuming that only lumber is needed for producing paper, i.e production flow is timber>lumber>paper) in the process. The displayed factory profit is merely added value. The mechanics of production are as easy as possible.

That means the paper mill buys it's lumber practically for the full WM price, even if I pruduce the lumber in my country? Now it makes sense, why I get all the profit from RGO timber and lumber... ok, never thought that it is so simple.. big thanks, now i can finally play the game...

PS. This also means that there is no difference if a raw material is from my country or imported, because the industry always pays the same price.

 

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That means the paper mill buys it's lumber practically for the full WM price, even if I pruduce the lumber in my country? Now it makes sense, why I get all the profit from RGO timber and lumber... ok, never thought that it is so simple.. big thanks, now i can finally play the game...

PS. This also means that there is no difference if a raw material is from my country or imported, because the industry always pays the same price.

Actually there is one exception, but it doesn't influnce factory profitability. For laissez-faire economies you get imports for half the price but you cannot tax more than 50% so it works the same. You import the goods for half the price but if you exported domestically produced goods you'd get at most half the price too.

 

[Gwalcmai]

In the case where your factory uses inputs from your own country, it isn't actually buying anything. The raw materials cost it has is the cost of not selling those raw materials on the WM. So, in your example, you sell for £50, but only make £35 profit because you lose out on selling £15 worth of lumber.

 

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In the case where your factory uses inputs from your own country, it isn't actually buying anything. The raw materials cost it has is the cost of not selling those raw materials on the WM. So, in your example, you sell for £50, but only make £35 profit because you lose out on selling £15 worth of lumber.

OMG, if you sell for £50 you earn £50 (in fact pops earn it, you get portion of it in taxes). If the factory uses £15 worth of lumber that you are not selling you get it back in the form of the final good. What can possibly be unclear here???