Managers of a Natural Monopoly Regulated Using Rate of Return

question 87

Multiple Choice

Managers of a natural monopoly regulated using rate of return regulation have an incentive to

• A) exaggerate the firm's costs.
• B) underestimate the firm's costs.
• C) minimise the monopoly's deadweight loss.
• D) exaggerate the firm's profit.
• E) make zero economic profit.

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