Scenario 17-4
Assume that a local bank sells two services, chequing accounts and ATM card services.Mr.Leung is willing to pay $10 a month for the bank to service his chequing account and $6 a month for unlimited use of his ATM card.Ms.Gardner is willing to pay only $6 for a chequing account, but is willing to pay $10 for unlimited use of her ATM card.Assume that each customer uses only one service and that the bank can provide each of these services at zero marginal cost.
-Refer to Scenario 17-4.If the bank is unable to use tying,what is the profit-maximizing price to charge for a chequing account
A)$6
B)$10
C)$12
D)$20

Question

Quizplus · Accepted Answer

The Answer of Scenario 17-4
Assume that a local bank sells two services, chequing accounts and ATM card services.Mr.Leung is willing to pay $10 a month for the bank to service his chequing account and $6 a month for unlimited use of his ATM card.Ms.Gardner is willing to pay only $6 for a chequing account, but is willing to pay $10 for unlimited use of her ATM card.Assume that each customer uses only one service and that the bank can provide each of these services at zero marginal cost.
-Refer to Scenario 17-4.If the bank is unable to use tying,what is the profit-maximizing price to charge for a chequing account
A)$6
B)$10
C)$12
D)$20

Scenario 17-4 Assume That a Local Bank Sells Two Services, Chequing Accounts