Homework Answers
Here, local bank is selling two services (1) checking accounts and
(2) ATM card service. Two customers are there. Mr Donethat is willing to pay $8 per month for checking account and $5 for unlimited ATM service. Whereas Another person Mr Beethere is ready to pay $3 for checking account and $10 for unlimited use of ATM service.
Objective of the bank is to fix appropriate price for these services.
A) In tying, two services are combined or bundled and a single price is charged. Here it is not possible as bank is unable to form tying. . Lets consider checking service. Donethat is willing to pay $8 and Beenthere only $3. So if price is fixed at $8, then only Donethat will be willing to buy. So total revenue is $8. On the other hand, if $3 price is fixed, then both will buy this service.
Thus total revenue will be $3x2=$06. So profit of the bank is maximized when price fixed at $8 and only Donethat buy the checking services.
B) Now consider ATM service. Donethat is ready to pay $5 while Beenthere can pay $10. So lower of the two i.e. $5 will be the price. At this price both will buy it. So total revenue will be $5*2=$10. If price is fixed above $5 then only one customer will buy it.
C) If Tying is possible, then bank will compare compared price of two services. Donethat will pay $8 for checking and $5 for ATM. Thus total amount he is ready to pay for both services is $8+$5=$13. On the other hand Beenthere will pay $3 for checking service and $10 for ATM. Thus his total payment will be $3+$10=$13. So bundled price is $13.
Answer: Tying price is $13.
D) In case of individual pricing, the total revenue is$8x1 + $5x2 = $ 18. In case of tying total revenue is-$13x2=$26
Thus additional profit of tying strategy is $26-$18=$8
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II. Assume that a local bank sells two services, checking accounts and ATM card services. Mr....
IL Assume that a local bank sells two services, checking accounts and ATM card services. Mr....
IL 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 $5 a month for unlimited use of his ATM card. Ms. Beenthere is willing to pay only $3 for a checking account, but is willing to pay $10 for unlimited use of her ATM card. To keep this example simple, assume that the bank can provide each...
II. Assume that a local bank sells two services, checking aceounts and ATM card services. Mr....
II. Assume that a local bank sells two services, checking aceounts and ATM card services. Mr. Donethat is willing to pay $8 a month for the bank to service his checking account and $5 a month for unlimited use of his ATM card. Ms. Beenthere is willing to pay only $3 for a checking account, but is willing to pay $10 for unlimited use of her ATM card. To keep this example simple, assume that the bank can provide each...
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I need all of the following journal entries done Date Transaction No. Jay opened two accounts...
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C++
Banks offer various types of accounts, such as savings,
checking, certificate of deposits, and money market, to attract
customers as well as meet their specific needs. Two of the most
commonly used accounts are savings and checking. Each of these
accounts has various options. For example, you may have a savings
account that requires no minimum balance but has a lower interest
rate. Similarly, you may have a checking account that limits the
number of checks you may write....
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IL 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 $5 a month for unlimited use of his ATM card. Ms. Beenthere is willing to pay only $3 for a checking account, but is willing to pay $10 for unlimited use of her ATM card. To keep this example simple, assume that the bank can provide each...
II. Assume that a local bank sells two services, checking aceounts and ATM card services. Mr. Donethat is willing to pay $8 a month for the bank to service his checking account and $5 a month for unlimited use of his ATM card. Ms. Beenthere is willing to pay only $3 for a checking account, but is willing to pay $10 for unlimited use of her ATM card. To keep this example simple, assume that the bank can provide each...
Answer Point Value Points Earned American Credit Union First National Bank Hillsboro Bank Internet Bank ATM Charges Home bank Free Free Free Free $1 4 free then $2 per use $3 $500 $200 $5 $6 Use of service at competitor's bank Checking Account Minimum balance required to avoid fees $400 $250 Monthly Maintenance Fee $13 7 free checks, then $1 per Per Check Processing Fees Unlimited check 1. Selecting a Bank. Sean wants to open a checking account with $275....
I need all of the following journal entries done
Date Transaction No. Jay opened two accounts at Union Stale Bank, using S3,000 of his own moncy. He deposited $2,500 in a checking account and $500 into savings 7:1 1 Jay borrowed S6,000 from his Aunt Emma and signed a note with 8% interest. Under the terms of the note, he must make payments of $250 plus acCrued interest on the first day of cach month. Jay put $4,500 into his...
C++
Banks offer various types of accounts, such as savings,
checking, certificate of deposits, and money market, to attract
customers as well as meet their specific needs. Two of the most
commonly used accounts are savings and checking. Each of these
accounts has various options. For example, you may have a savings
account that requires no minimum balance but has a lower interest
rate. Similarly, you may have a checking account that limits the
number of checks you may write....
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