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Southern new hampshire university

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Reference no: EM131249484

Southern New Hampshire University

This question is like question #18 in Chapter 2: Managerial Economics and Business Strategy by Michael R. Baye & Jeffrey T. Price
Numbers details are just different

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 $10 million in withdrawals from other banks' ATM machines. On average, noncustomers earn a wage of $20 per hour and pay ATM fees of $3.25 per transaction. It is estimated that banks would be willing to maintain services for 5 million transactions at $0.75 per transaction, while noncustomers would attempt to conduct 21 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)

A) Based on this information, what would be the nonpecuniary cost of legislation that would place a $0.75 cap on the fees banks can charge for noncustomer transactions?

B) What would be the full economic price of this legislation?

Reference no: EM131249484

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