Regulating "Natural Monopolies" According to the "Rate of Return" Criterion

question 27

Multiple Choice

Regulating "natural monopolies" according to the "rate of return" criterion is likely to

• A) increase the monopolist's incentive to minimize cost.
• B) increase output compared to the situation where the firm is unregulated.
• C) completely eliminate the "welfare loss" due to monopoly.
• D) do all of the above

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Definitions:

Excise Tax

A tax imposed on specific goods, services, and activities, such as gasoline, tobacco, and alcohol, often used to discourage their use and generate revenue.

Personal Income Tax

Tax imposed on individuals based on their income, including wages, salaries, and investment income.

Trade Deficit

A condition in which a nation's expenditures on imported goods and services surpass its income from exports, leading to a trade deficit.

Trade Deficit

A situation that occurs when a country's imports of goods and services exceed its exports.