a. Nonpecuniary cost of legislation that would place a $1.00 cap on the fees banks can charge for noncustomer transactions is: $6.40.
b. The full economic price of this legislation is: $7.40 per transaction.
Equilibrium price, Pe = $3.00 per transaction
Opportunity cost = $24 per hour
Ceiling price, C = $1.00 per transaction
First step is to calculate the Shortage in transaction volumes
Shortage in transaction volumes =22million - 6million
Shortage in transaction volumes =16million
Second step is to calculate the time lost in 16million of shortage transaction
Time lost= (16mn x 1 minute)/60
Time lost= 16 minutes /60
Third step is to calculate opportunity cost of 16 minutes which is the non pecuniary cost of legislation
Opportunity cost = $24 per hour x 16 / 60
Opportunity cost = $6.40
b. Full economic price of this legislation:
Full economic price of this legislation= Ceiling price + Opportunity cost
Full economic price of this legislation = $ 1.00+$6.40
Full economic price of this legislation = $7.40 per transaction
Inconclusion the Nonpecuniary cost of legislation is $6.40 and the full economic price of this legislation is $7.40 per transaction.
Learn more here:
brainly.com/question/16781058
