econ 176

From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on non-customers who make $12 million in withdrawals from other banks’ ATM machines. On average, noncustomers earn a wage of $ 24 per hour and pay ATM fees of $ 3.00 per transaction. It is estimated that banks would be willing to maintain services for 5 million transactions at $ 1.25 per transaction, while noncustomers would attempt to conduct 19 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. Based on this information

1) Describe the impact this would have on a manuafaturer who manufactures ATM machines.  Please defend your answer incorporating your knowledge about supply and demand?

2) If you were the vice president in charge of ATM services, what would you advise the CEO to do with regards to your analysis? 

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