<p>Some questions I have… I’ve been slacking off :(</p>
<p>1.)What kind of cost is associated with owning a building and lot? Would a good businessperson ignore costs to give you a better deal? If a car dealership owns their own building and lot could he pass significant savings on to his customers?</p>
<p>2.)There was a legislation passed preventing banks from charging ATM fees for cash withdrawals, the purpose was to stop “excessive” ATM fees. If this was never passed, what market forces would stop banks from charging excessive ATM fees? Who would this harm if a law was passed prohibiting banks from charging ATM fees?</p>
<p>Thanks :)</p>
<p>Any help at all 
I need help on this :(</p>
<p>2) Since the marginal cost of an ATM cash withdrawal is close to zero, and since banking is a strongly competative business, cash withdrawals would eventually become free. (The main force for this would be competition.)</p>
<p>Since the market clearing condition is no fees, the no fee situation is pareto optimal. The law would in the long run have no effect.</p>
<p>well for 1) it is property tax and insurance. Also the car dealer can give the person a fee because they are handing ove the insurance of that car to its new owner, and the company doesn’t pay rent so they can afford to sell at better rates.</p>
<p>I didn’t really understand 2</p>
<p>Thanks guys, you guys are a big help :).</p>
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<p>If the legislation wasnt passed, meaning the banks could add more charges to use the ATM, the market forces that woud stop banks from adding these charges is a decrease in demand. If price goes up, demand goes down. A decrease in demand makes the banks lose their incentive to increase the charges.</p>
<p>Actually, tripperian, the force here would rather be competition.
Since the marginal cost of supplying the service is pretty much zero, the banks will be competing with price until the price of a cash withdrawal is zero. This assumes perfect competition and some elasticity of demand.</p>
<p>^But by assuming perfect competition wouldn’t one be assuming that in the longrun ATM machines would really offer no real economic profits? Then what would be the point of offering an ATM at all?</p>
<p>you can still make accounting profits w/o making economic profits</p>
<p>1) Why would a businessperson ignore cost to give you a better deal? One of the issues that you need to consider is the tax consequences to the form of ownership. Why would they pass significant savings to their customers? It is a competitive business. If they efficiently run their business, they will price their cars at the maximum just below their competition to maximize profit by high price and high volume. It might be more advantageous to lease the land and building in order to “expense” these payments each year as opposed to amortizing the cost of owning the land over 31 years (I believe). If this begins to make sense, I will elaborate a little more. I am not an expert but in the land of the blind, the one-eyed is king.</p>