Problem 02-18 Excel Exercise Parts 1 and 2 From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $10 million in withdrawals from other banks' ATM machines. On average, noncustomers earn a wage of $22 per hour and pay ATM fees of $3.50 per transaction. It is estimated that banks would be willing to maintain services for 4 million transactions at $1.00 per transaction, while noncustomers would attempt to conduct 20 million transactions at that price. Estimates suggest that, for every 1 million gap between the desired and available transactions, a typical consumer will have to spend an extra minute traveling to another machine to withdraw cash. Suppose there is legislation that would place a $1.00 cap on the fees banks can charge for noncustomer transactions. Problem 02-18 - Excel Exercise Part 2 of 2 Assume that the information from the problem changed to the following: Withdrawals from other banks (millions) Average wage per hour Average ATM fee per transaction Transactions provided by banks at cap fee (millions) Noncustomer transactions demanded at cap fee (millions) Extra minutes travelled per 1 million gap between desired and available transactions Proposed cap on transaction fee $ $ 8 24 $3.00 $ 4 24 1 3
Problem 02-18 Excel Exercise Parts 1 and 2 From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $10 million in withdrawals from other banks' ATM machines. On average, noncustomers earn a wage of $22 per hour and pay ATM fees of $3.50 per transaction. It is estimated that banks would be willing to maintain services for 4 million transactions at $1.00 per transaction, while noncustomers would attempt to conduct 20 million transactions at that price. Estimates suggest that, for every 1 million gap between the desired and available transactions, a typical consumer will have to spend an extra minute traveling to another machine to withdraw cash. Suppose there is legislation that would place a $1.00 cap on the fees banks can charge for noncustomer transactions. Problem 02-18 - Excel Exercise Part 2 of 2 Assume that the information from the problem changed to the following: Withdrawals from other banks (millions) Average wage per hour Average ATM fee per transaction Transactions provided by banks at cap fee (millions) Noncustomer transactions demanded at cap fee (millions) Extra minutes travelled per 1 million gap between desired and available transactions Proposed cap on transaction fee $ $ 8 24 $3.00 $ 4 24 1 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 02-18 Excel Exercise Parts 1 and 2
From California to New York, legislative bodies across the United States are considering eliminating or reducing the
surcharges that banks impose on noncustomers, who make $10 million in withdrawals from other banks' ATM machines.
On average, noncustomers earn a wage of $22 per hour and pay ATM fees of $3.50 per transaction. It is estimated that
banks would be willing to maintain services for 4 million transactions at $1.00 per transaction, while noncustomers would
attempt to conduct 20 million transactions at that price. Estimates suggest that, for every 1 million gap between the
desired and available transactions, a typical consumer will have to spend an extra minute traveling to another machine to
withdraw cash. Suppose there is legislation that would place a $1.00 cap on the fees banks can charge for noncustomer
transactions.
Problem 02-18 - Excel Exercise Part 2 of 2
Assume that the information from the problem changed to the following:
Withdrawals from other banks (millions)
Average wage per hour
Average ATM fee per transaction
Transactions provided by banks at cap fee (millions)
Noncustomer transactions demanded at cap fee (millions)
Extra minutes travelled per 1 million gap between desired and
available transactions
Proposed cap on transaction fee
$
8
$24
$3.00
$
4
24
1
3
Transcribed Image Text:Required:
1. What is the nonpecuniary cost of this legislation?
Instruction: Enter your response rounded to two decimal places.
Nonpecuniary cost of the legislation
2. What is the full economic price of this legislation?
Instruction: Enter your response rounded to two decimal places.
Full economic price of the legislation
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