Scenario 17-5 Assume That a Local Bank Sells Two Services, Checking Accounts

question 48

Multiple Choice

Scenario 17-5
Assume that a local bank sells two services, checking accounts and ATM card services. The bank's only two customers are Mr. Donethat and Ms. Beenthere. Mr. Donethat is willing to pay $8 a month for the bank to service his checking account and $2 a month for unlimited use of his ATM card. Ms. Beenthere is willing to pay only $5 for a checking account, but is willing to pay $9 for unlimited use of her ATM card. Assume that the bank can provide each of these services at zero marginal cost.
-Refer to Scenario 17-5.If the bank is unable to use tying,what is the profit-maximizing price to charge for a checking account?

• A) $13
• B) $9
• C) $8
• D) $5

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Definitions:

Financial Risk

The possibility of losing money on an investment or business venture.

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