Which of the Following Is a Possible Negative Result of a Policy

question 99

Multiple Choice

Which of the following is a possible negative result of a policy of average-cost pricing as a method of regulating a natural monopoly?

• A)economic losses will accumulate over time to unsustainable levels
• B)taxpayers will have to subsidize the economic losses of the regulated monopoly
• C)the regulated monopoly earns unreasonable profits
• D)socially desirable capital investment may not occur
• E)the induced technological change leads to more industries becoming natural monopolies

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Definitions:

Homogenization

The process of making things uniform or similar by blending disparate elements, often used in cultural, biological, and industrial contexts to describe the reduction of diversity.

Cultural Diversity

The existence of a variety of cultural or ethnic groups within a society.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, leading to increased interconnectedness and interdependence of the world's economies, cultures, and populations.

Modernization Theory

A model of economic and social development that explains global inequality in terms of technological and cultural differences between nations.