Question

Which one? c. Why will the town from part b also attract shoppers with higher incomes? 10. In the late 1990s, the town of Santa Monica, California, made it illegal for banks to charge people ATM fees. As you probably know, it's almost always free to use your own bank's ATMs, but there's usually a fee charged whern you use another bank's ATM. (Source: The war on ATM fees, Time, November 29, 1999.) As soon as Santa Monica passed this law, Bank of America stopped allowing customers from other banks to use their ATMs: In bank jargon, B of A banned "out-of-network" ATM usage. In fact, this ban lasted for only a few days, after which a judge allowed banks to continue to charge fees while awaiting a full court hearing on the issue. Eventually, the court declared the fee ban illegal under federal law But let's imagine the effect of a full ban on out- of-network fees. a. In the figure, indicate the new price per out-of-network ATM transaction after the fee ban. Also clearly label the shortage Out-of- network fee Supply of ATM transactions Demand for ATM transactions Number of ATM transactions in Santa Monica

Answer 1

Ans . a) The new price per out of transaction fee would be $0. You can indicate a line at $0 where Demand would be in the farthest right side and the supply would be the farthest left. The difference between them is the Shortage.

b) There is a shutdown completely and thus there would be no producer and consumer surplus. Price is $0 and hence there is no exchange , which means no surplus.

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