Bank sells two services-checking accounts-atm card services

Assignment Help Business Economics

Reference no: EM131239203

Assume that a local bank sells two services-- checking accounts and ATM card services. Mr. Donethat is willing to pay $8 a month for the bank to service his checking account, and $10 a month for unlimited use of his ATM card. Ms. Beenthere wants to pay only $5 for a checking account, but will pay $15 for unlimited use of her ATM card. To keep this example simple, assume that the bank can provide each of these services at zero marginal cost. SHOW WORK.

A) If the bank is unable to use tying, what is the profit-maximizing price to charge for a checking account?

B) If the bank is unable to use tying, what is the profit-maximizing price to charge for unlimited use of an ATM card?

C) If the bank is able to use trying to price checking account and ATM services, what is the profit-maximizing price to charge for the "tried good?

D) How much additional profit does the bank make when it switches to use of a trying strategy to price checking accounts and ATM services?

E) How much total surplus is generated from using trying to price the checking account and ATM services? How does that compare to the nontied pricing strategy? Which strategy has the largest deadweight loss?

Reference no: EM131239203

Questions Cloud

Design an event-driven programming solution : LMB drag out a rectangle such that the rectangle extends from the center position and one of the corner positions of the rectangle always follows the current mouse position.

How each perspective would view or explain the issue : Provide a conclusion that discusses which perspective you think is most applicable to the issue or how the three perspectives complement one another in understanding the issue.

Implement your design with mfc and direct-3d : For the line defined in Exercise 1, define a velocity that is the same as the slope of the line: once created, the line will travel along the direction defined by its slope. Use the length of the line as the speed. (Note that longer lines travel f..

Discuss argument that homo were the first tool-producers : Discuss the argument and evidence that australopithecines rather than early Homo were the first tool-producers. What do you think?

Bank sells two services-checking accounts-atm card services : Assume that a local bank sells two services-- checking accounts and ATM card services. Mr. Donethat is willing to pay $8 a month for the bank to service his checking account, and $10 a month for unlimited use of his ATM card. Ms. If the bank is unab..

Kirkpatrick four levels of evaluation : Look at Kirkpatrick's four levels of evaluation and justify why you would use all these levels even though your boss was interested only in the last one (results).

Functions of management implemented in most organizations : How would you demonstrate the critical relationships that exist between assessments and the four functions of management implemented in most organizations

Implement your design with fltk and opengl : Notice that in this case the useful application internal state information (the center position of the line) and the drawing presentation requirements (end points of the line) do not coincide exactly. When defining the application state, we should..

Web site of cdc morbidity : Visit the Web site of CDC's Morbidity & Mortality Weekly report www.cdc.gov/mmwr. Has the CDC reported any new outbreaks or health risks this week? What other issues is the nation's epidemiology agencies concerned about this week? Discuss in detai..

User Account

All Pages