If a Restaurant Was a Natural Monopoly, Dividing the Restaurant

question 145

Multiple Choice

If a restaurant was a natural monopoly, dividing the restaurant equally into two separate restaurants would

• A)decrease marginal cost.
• B)raise average total cost.
• C)increase total revenue.
• D)make marginal revenue less elastic.

---

Definitions:

Compounding

The process by which the value of an investment increases exponentially over time due to earning interest on both the initial principal and the accumulated interest.

Present Value

is a financial concept that describes the current value of a future amount of money or stream of cash flows given a specified rate of return.

Discounting

A financial process used to determine the present value of future cash flows by applying a discount rate, which accounts for the time value of money.

Present Value

The present valuation of a series of future cash inflows or a one-time sum, based on a specified rate of return.