Author Question: Starbucks is considering opening a new store on the Drexel University Campus in Philadelphia. To ... (Read 114 times)

mynx · **on:** Jun 29, 2018

Starbucks is considering opening a new store on the Drexel University Campus in Philadelphia.

To analyze this decision Starbucks must compare the costs of starting the new store, which will be incurred today, with the profit the store will create in the future. When making this decision, the higher is the interest rate, the ________ is the discounted present value of the profits and the ________ likely Starbucks will be to open the store. A) higher; more
B) higher; less
C) lower; more
D) lower; less

Question 2

If an average cost pricing rule is imposed on the natural monopoly shown in the figure above, then the price will be

A) 2.
B) 4.
C) 5.
D) 6.