A Local Regulator Has Calculated the Average Cost of Production

question 1

Multiple Choice

A local regulator has calculated the average cost of production for the public water utility. The regulator has allowed an adjustment for the normal rate of profit the firm should expect to earn, and then set the price that consumers can be charged accordingly. In this instance, the regulator has used which of the following?

• A) cost-plus regulation
• B) cost-plus analysis
• C) price-cap regulation
• D) market-price analysis

---

Definitions:

Visual Contrast

The difference in color, brightness, or shape that makes an object or its representation in an image or screen distinguishable from other objects and the background.

Document

Any written or printed material that provides information, serves as an official record, or acts as evidence.

Small Chunks

Dividing information or tasks into smaller, more manageable parts.

Smartphone

A mobile phone that performs many of the functions of a computer, typically having a touchscreen interface, internet access, and an operating system capable of running downloaded apps.