0
   

Micro Economics Question, Please HELP!

 
 
Reply Wed 8 Mar, 2017 01:05 pm
Assume that a local bank sells two services, checking accounts and ATM card services.Mr. Don 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. Ben is willing to pay only $5 for a checking account, but is willing to 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.

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 tying to price checking account and ATM service, what is the profit-maximizing price to charge for the "tied" good?

D. How much additional profit does the bank make when it switches to use of a tying strategy to price checking account and ATM service?

E. How much total surplus is generated from using tying to price the checking account and ATM service? How does that compare to the non tied pricing strategy? Which strategy has the largest dead weight loss?

Please show work I need help understanding these questions, Im really confused. Thanks!
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Question • Score: 0 • Views: 734 • Replies: 1
No top replies

 
RosemaryM1955
 
  1  
Reply Wed 8 Mar, 2017 02:04 pm
@RosemaryM1955,
These are the answers I have so far..Can someone tell me if Im right or wrong?? I also still need the answer for E....

A. $5
B. $9
C. $10
D.$1
E.??
0 Replies
 
 

Related Topics

Who or What is Responsible? - Discussion by Merry Andrew
Debt ceiling? - Question by Buffalo
More Proof that HPQ SUCKS! - Discussion by hawkeye10
The Legacy of the Reagan Revolution - Discussion by Cycloptichorn
Let it crash - Discussion by FreeDuck
The Bush/Obunga Dark Age - Discussion by gungasnake
No real limits to growth - Discussion by gungasnake
Sovereign debt - Question by JohnJD
Wage discrimination - Question by zewittykitty
 
  1. Forums
  2. » Micro Economics Question, Please HELP!
Copyright © 2021 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.05 seconds on 09/21/2021 at 02:28:42