You own a small bank in a state that is now considering allowing interstate banking. You oppose interstate banking because it will be possible for the very large money center banks in New York, Chicago, and San Francisco to open branches in your bank’s geographic market area. While proponents of interstate banking point to the benefits to consumers of increased competition, you worry that economies of scale might ultimately force your now profitable bank out of business. Explain how economies of scale (if significant economies of scale in fact do exist) could result in your bank being forced out of business in the long run.
Answer to relevant QuestionsThe Ali Baba Co. is the only supplier of a particular type of Oriental carpet. The estimated demand for its carpets is Q = 112,000 − 500P + 5Mwhere Q = number of carpets, P = price of carpets (dollars per unit), and M = ...Tots-R-Us operates the only day-care center in an exclusive neighborhood just outside of Washington, D.C. Tots-R-Us is making substantial economic profit, but the owners know that new day-care centers will soon learn of this ...Some states have had laws restricting the sale of most goods on Sunday. Consumers, by and large, oppose such laws because they find Sunday afternoon a convenient time to shop. Paradoxically, retail trade associations ...In 1999 Mercedes-Benz USA adopted a new pricing policy, which it called NFP (negotiation-free process), that sought to eliminate price negotiations between customers and new-car dealers. An article in The New York Times ...“Declining block pricing is a crude form of perfect price discrimination.” In what sense is this statement correct? In what important way is it wrong?
Post your question