Why does the rate of return (RoR) regulation stimulate more than the efficient level of capital investment from the regulated utilities companies? a. A state government directly subsidies capital investments. b. The capture effect rewards capital investment more than other types of investment. c. The RoR is applied to the rate base, which includes capital but not operating costs. d. Regulator salaries increase as capital increases.
Why does the rate of return (RoR) regulation stimulate more than the efficient level of capital investment from the regulated utilities companies? a. A state government directly subsidies capital investments. b. The capture effect rewards capital investment more than other types of investment. c. The RoR is applied to the rate base, which includes capital but not operating costs. d. Regulator salaries increase as capital increases.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Why does the
a. A state government directly subsidies capital investments.
b. The capture effect rewards capital investment more than other types of investment.
c. The RoR is applied to the rate base, which includes capital but not operating costs.
d. Regulator salaries increase as capital increases.
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