What Is One Problem with Regulating a Monopolist on the Basis

question 93

Multiple Choice

What is one problem with regulating a monopolist on the basis of cost

• A)Regulators are unable to control prices and/or production effectively.
• 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:

P/E Multiple

The price-to-earnings ratio, a valuation measure comparing the current price of a stock to its per-share earnings.

EPS

Earnings Per Share - a financial metric calculating the portion of a company's profit allocated to each outstanding share of common stock, indicating a company's profitability.

Intrinsic Value

The actual value of a company, asset, or currency, based on underlying perception of its true value including all aspects of the business.

ROE

Return on Equity indicates a company's return from shareholder investments by showcasing the profit made from each dollar invested by shareholders.