One Reason Why It Is Difficult to Regulate a Natural

question 25

Multiple Choice

One reason why it is difficult to regulate a natural monopoly is

• A)the lack of relevant economic theory
• B)determining what price the firm is actually charging its customers
• C)determining the appropriate side payment
• D)an information problem - the monopoly's managers have an incentive to overstate costs
• E)an information problem - the monopoly's managers have an incentive to overstate revenues

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