Which of the Following Is a Possible Negative Result of a Policy

question 99

Multiple Choice

Which of the following is a possible negative result of a policy of average-cost pricing as a method of regulating a natural monopoly?

• A)economic losses will accumulate over time to unsustainable levels
• B)taxpayers will have to subsidize the economic losses of the regulated monopoly
• C)the regulated monopoly earns unreasonable profits
• D)socially desirable capital investment may not occur
• E)the induced technological change leads to more industries becoming natural monopolies

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