A Basic Problem with Public Regulation Is That

question 53

Multiple Choice

A basic problem with public regulation is that

• A) regulatory agencies exist at the state but not the federal level of government and therefore lack power.
• B) it is difficult to decide what constitutes a fair rate of return.
• C) it inevitably expands so that ultimately all production is nationalized.
• D) regulatory commissions set only minimum prices that regulated firms can charge, thus promoting excessive entry of new firms into regulated markets.
• E) regulation requires that modestly staffed government agencies make the day-to-day operating decisions of regulated firms.

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Definitions:

Cash Conversion Cycle

A metric that shows the number of days it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Average Inventory

An accounting metric that estimates the value or quantity of inventory over a period to assess company efficiency.

Accounts Receivable

Funds that customers owe to a business for the products or services received but not yet paid for.

Aggregate Demand

The entirety of consumer and business demand for goods and services in an economy, assessed at an overall price level within a defined time span.