Question: 1. Consider the market for automatic teller machine services in a city. The price is the fee for a cash withdrawal. a. Sketch the demand

1. Consider the market for automatic teller machine services in a city. The price is the fee for a cash withdrawal.

a. Sketch the demand curve and the supply curve for ATM transactions.

b. How is the equilibrium price determined?

c. If the town council imposes a ban on ATM fees—

equivalent to a price ceiling in this market—what happens to quantity supplied and quantity demanded?

d. Economists frequently argue against price controls because of the shortages and associated problems that they create. What are some of the potentially negative side effects of interference in the ATM market?

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