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A bank in a mediumsized Midwestern city, Company X, currently charges$1 per transaction at it's ATM's. To determine whether to increase price, the bank managers experimented with a number of higher prices (in25-cent increments) at selected ATMs. The marginal cost of an ATM transaction is $0.50
ATM fee Usage
$2.00 1000
$1.75 1500
$1.50 2000
$1.25 2500
$1.00 3000

What ATM fee should the bank charge?

6.5 If elasticity is -2, price is $10, and marginal cost is $8, should you raise or lower price?

 

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9305949

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