Compared to an Unregulated Firm,a Cost-Plus Regulated Firm Has a Smaller

question 116

Multiple Choice

Compared to an unregulated firm,a cost-plus regulated firm has a smaller incentive to pursue cost-saving innovations because

• A) few cost-saving innovations exist for natural monopolies.
• B) the reduction in costs never improve profitability.
• C) the regulators refuse to allow the firm to adopt the innovation.
• D) regulated firms do not seek to maximize profits.
• E) the reduction in costs ultimately results in a reduction in the regulated price.

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