-A Regulated Firm May Have an Incentive to Spend an Inefficiently

question 37

Multiple Choice

-A regulated firm may have an incentive to spend an inefficiently high amount on capital when:

• A)it becomes deregulated.
• B)fair rate of return regulation is used.
• C)regulators set price equal to marginal cost.
• D)it is part of a monopolistically competitive industry.
• E)it is allowed to charge a monopoly price.

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Definitions:

Complete

Having all necessary parts, elements, or steps; fully finished or concluded.

Accurate

Free from errors, mistakes, or discrepancies; precise and correct.

Multinational Company

A corporation that operates in multiple countries, managing production or delivering services across international boundaries.

Complex Process

A complicated series of actions or steps that involve multiple factors or considerations and usually require detailed planning and execution.