Bank-With-Us and First-Bank Are the Only Two Banks in GreenVillage,and

question 135

Multiple Choice

Bank-with-us and First-Bank are the only two banks in GreenVillage,and they are trying to increase their profits by attracting more customers.Consumers are indifferent between banks;they are interested only in the interest rate they can earn on their savings.Assume that each bank can choose to offer a 2% or a 5% interest rate on savings.If both banks are offering 2% interest rate,they split the market and each earns $1.6 billion in profits.If both banks are offering 5% interest rate,they split the market and each earns $1.2 billion in profits.If one offers 2% and the other one offers 5%,the bank offering the higher interest rate earns $2 billion in profits,and the other bank earns only $1 billion.Which of the following statements is correct?

• A) If Bank-with-us is offering 2% interest rate,then First-Bank is also offering 2% interest rate
• B) If Bank-with-us is offering 2% interest rate,then First-Bank is offering 5% interest rate
• C) First-Bank will offer 2% interest rate no matter what the other bank does
• D) Bank-with-us will offer 2% interest rate only if First-Bank will offer 2%
• E) Bank-with-us will offer 5% interest rate no matter what the other bank does

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Definitions:

Exclusive Representation

The legal right of a designated union to represent all employees in a bargaining unit in negotiation and grievance processes, regardless of union membership.

NLRA

The National Labor Relations Act, a foundational statute of US labor law that protects the rights of employees to organize and to bargain collectively with their employers.

Shareholder Model

A corporate governance model focusing on maximizing shareholder value and prioritizing the interests of shareholders in company decisions.

Stakeholder Model

A governance framework that focuses on balancing the interests of multiple stakeholders in a company, not just shareholders.