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

question 71

Multiple Choice

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 able to use tying to price a chequing account and the ATM service,what is the profit-maximizing price to charge for the tied good

• A)$6
• B)$12
• C)$16
• D)$20

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Definitions:

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue; often referred to as the bottom line.

Average Total Assets

A financial metric calculated by averaging a company's total assets over a certain period, used to measure a company's asset utilization efficiency.

Held-to-maturity Securities

Debt securities that a company intends and is able to hold until they mature.

Equity Securities

Equity Securities are financial assets representing ownership interest in a company, such as stocks, which provide voting rights and potential dividends.