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.

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Definitions:

Judiciousness

The quality of having or showing good judgment; the act of being judicious.

Interpretation

The act of explaining the meaning of something, such as a text, behavior, or event, often involving personal insight.

Problematically Vague

Descriptive of language or terms that are unclear, imprecise, and can lead to misunderstanding or confusion.

Unclear Boundaries

Situations or issues that lack precise limits or definitions, making them difficult to categorize or understand fully.