Cross-price elasticity of demand between goods

Assignment Help Business Economics

Reference no: EM131236804

From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $14 million in withdrawals from other banks’ ATM machines. On average, noncustomers earn a wage of $24 per hour and pay ATM fees of $3.25 per transaction. It is estimated that banks would be willing to maintain services for 6 million transactions at $1.00 per transaction, while noncustomers would attempt to conduct 22 million transactions at that price. Estimates suggest that, for every 1 million gap between the desired and available transactions, a typical consumer will have to spend an extra minute traveling to another machine to withdraw cash.

Instructions: Round your answer to the nearest penny (2 decimal places).

1. Based on this information, what would be the nonpecuniary cost of legislation that would place a $1.00 cap on the fees banks can charge for noncustomer transactions?

2. What would be the full economic price of this legislation?

3. Suppose the cross-price elasticity of demand between goods X and Y is 4. How much would the price of good Y have to change in order to change the consumption of good X by 20 percent?

Reference no: EM131236804

Questions Cloud

Find the price elasticity of demand at that price-quantity : Statisticalstudiesestimatethe1981supplycurveforwheatwasapproximatelyasfollows: QS=1800+240P where price is measured in nominal dollars per bushel and quantities in millions of bushels per year. These studies also indicate that in 1981, the demand cur..

What would be the full economic price of this legislation : From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $14 million in withdrawals from other banks’ ATM machines. What would be the n..

Survey employees online using online surveys : I will survey employees online using online surveys, is it an appropriate approarch to select a random sample? The variables I am thinking about are (Salary and Wages, Working Hours, Educational Level, Years of working experience, average base starti..

The social cost of carbon and economic profits : The social cost of carbon is: Economic profits are:

Cross-price elasticity of demand between goods : From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $14 million in withdrawals from other banks’ ATM machines. Suppose the cross-p..

When fed decreases the interest rate paid on reserves : When the Fed decreases the interest rate paid on reserves, if the ratio of currency to deposits decreases also while the monetary base is constant, then:

Basis for examining managerial decision-making : In the wake of corporate scandals at Enron, Tyco, and WorldCom, some argue that managers of large, publicly owned firms sometimes make decisions to maximize their own welfare as opposed to that of stockholders. Does such behavior create problems in u..

What would be the nonpecuniary cost of legislation : From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $14 million in withdrawals from other banks’ ATM machines. What would be the f..

Comparing access of women to important diagnostic services : When looking at data for 1986 to more recent data comparing access of women to important diagnostic services related to medical disorder peculiar to women, we find that access has remained flat.

User Account

All Pages