The Major Disadvantage of Rate Regulation of Natural Monopolies Is

question 16

Multiple Choice

The major disadvantage of rate regulation of natural monopolies is that:

• A) natural monopolists spend too much time lobbying for higher rates.
• B) unlike a competitive firm, the natural monopoly has too much incentive to increase efficiency.
• C) the regulatory bureaucracy grinds slowly and generates regulatory lags.
• D) state public service commissions are poorly staffed and supervised.
• E) natural monopolists spend too much money on philanthropic activities.

---

Definitions:

Compulsive Behavior

Repetitive, often ritualistic actions that an individual feels driven to perform, usually as a response to obsessive thoughts or to reduce anxiety.

OCD-Related Disorders

A category of mental health disorders characterized by obsessions (unwanted, persistent thoughts) and compulsions (repetitive behaviors or mental acts) that significantly interfere with daily living.

Social Phobia

Social phobia is an anxiety disorder characterized by an intense fear of social situations and being judged or negatively evaluated by others.

Anxiety Disorder

A mental health disorder characterized by feelings of worry, anxiety, or fear that are strong enough to interfere with one's daily activities.