How might profit regulation lead to rising prices for consumers? A. Cost information is not easy to determine, and a natural monopoly whose price is held at the level of cost has an incentive to report such information at inflated levels. B. Regulators are not well incentivized to obtain accurate cost information and may pass inaccurate or inflated costs onto the consumer in the form of higher prices. C. The firm does not have an incentive to lower its costs. Thus, over time, and costs may gradually rise. D. All of the above.

How might profit regulation lead to rising prices for consumers? A. Cost information is not easy to determine, and a natural monopoly whose price is held at the level of cost has an incentive to report such information at inflated levels. B. Regulators are not well incentivized to obtain accurate cost information and may pass inaccurate or inflated costs onto the consumer in the form of higher prices. C. The firm does not have an incentive to lower its costs. Thus, over time, and costs may gradually rise. D. All of the above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How might profit regulation lead to rising prices for consumers?
A. Cost information is not easy to determine, and a natural monopoly whose
price is held at the level of cost has an incentive to report such information at
inflated levels.
B. Regulators are not well incentivized to obtain accurate cost information and
may pass inaccurate or inflated costs onto the consumer in the form of higher
prices.
C. The firm does not have an incentive to lower its costs. Thus, over time, and
costs may gradually rise.
D. All of the above.

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