What Problem Is Caused by Subsidizing a Natural Monopoly Regulated

question 317

Multiple Choice

What problem is caused by subsidizing a natural monopoly regulated using a marginal cost pricing rule?

• A) The regulated firm ends up earning an economic profit.
• B) Consumers pay too much for the product of the monopoly.
• C) This policy is a two-part tariff, which creates inefficiency.
• D) The taxes required to gain the revenue used as the subsidy result in a deadweight loss that subtracts from gains in efficiency which result from use of the marginal cost pricing rule.
• E) The regulated firm goes out of business if it is subsidized.

---

Definitions:

Hypothalamus

A region of the brain beneath the thalamus, responsible for regulating many bodily functions, including hunger, thirst, emotions, and the body's circadian rhythms.

Neural Imaging Technology

Neural Imaging Technology involves the use of various techniques to directly or indirectly image the structure, function/pharmacology of the nervous system.

Outside Interference

Outside interference refers to any external factor or influence that disrupts or changes the course of an event, process, or system.

Statistical Analysis

The collection, examination, interpretation, presentation, and organization of data to understand underlying patterns and trends.