Four forms of distortion are common in reaching conclusions regarding margins by comparing prices at different stages of marketing.. First, the price quotations used may not be representative of the general level of prices they are supposed to represent. For example, many persons cite examples based on retail prices paid by them in the grocery stores they patronize, which obviously are not likely to be representative. Second, the prices used may not cover products of comparable description or quality. The retail quotation, for example, may be for good-grade beef, whereas the wholesale price of beef or the price received by farmers for cattle are for grades which average below good. Third, processing and handling involve waste and spoilage, so that prices of equivalent quantities of the product at each stage of marketing must be used and adjustment made for any by-product content. Thus, one would not be justified in comparing the retail price of beefsteak with the price of cattle without allowing for the fact that only about 20.5 kg of beef is obtained from 45.5 kg of beef cattle and that only a small part of the 20.5 kg is steak. And in the fourth place, there is a lag in time between the marketing operations which must be taken into account.

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