One Problem with Regulating a Monopolist on the Basis of Cost

question 88

Multiple Choice

One problem with regulating a monopolist on the basis of cost is that

• A)by focusing on costs, the regulators ignore profits.
• B)it does not provide an incentive for the monopolist to reduce its cost.
• C)a monopolist's costs, by definition, are higher than costs of perfectly competitive firms.
• D)a monopolist is still able to generate excessive economic profits.

---

Definitions:

Regain Confidence

The process of restoring trust in oneself or one’s abilities after a period of doubt or failure.

Deliver In Person

The act of physically presenting or handing something to someone directly.

Formal Letter

A written communication following specific conventions, designed for official, business, or professional contexts.

Bad-News Portion

The segment of communication specifically designed to convey disappointing or negative information.