6-3 Pricing ATM machines
A bank in a mediumsized Midwestern city, Firm X, currently charges$1 per transaction at it's ATM's. To determine whether to raise 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
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?© BrainMass Inc. brainmass.com October 10, 2019, 5:57 am ad1c9bdddf
** Please see the attached file for the complete solution **
Marginal cost for transactions over 1000 ------ first 1000 transactions is zero.
This solution explains how to calculate an optimum price given a number a variables.