Which of the Following Statements Regarding Economic Regulation Is TRUE

question 143

Multiple Choice

Which of the following statements regarding economic regulation is TRUE?

• A) Economic regulation has failed by insisting that firms must be allowed to earn a normal rate of return.
• B) Rate-of-return regulation has been much more effective than cost-of-service regulation.
• C) Economic regulation deals only with rates of return, and not with prices.
• D) Economic regulation deals mainly with prices firms charge, but firms can alter their return by altering quality of service, effectively raising the price per constant-quality-unit.

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Definitions:

Reliability

The likelihood that a system or component will perform its required functions for a specified period under stated conditions.

Components

Individual parts or elements that combine or work together within a larger product, system, or mechanism.

Series

A sequence of numbers, objects, or events arranged in a specific order and often following a specific rule.

Parallel

Concurrent or simultaneous; in computing, refers to processes that are executed at the same time.