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:

Cost Of Goods Sold

The total costs directly tied to the production of goods sold by a company, including materials and labor.

Merchandise Inventory

Goods that a company owns and intends to sell, comprising a significant part of a retailer’s current assets.

Cost Of Goods Manufactured

The total cost incurred by a company to manufacture its products, including labor, material, and overhead costs, during a specific period.

General & Administrative

Expenses related to the general operation of a company, including salaries of executive personnel, rent, utilities, and office supplies, not directly tied to production.