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Merly Dávila
on Dec 12, 2024

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Regulating natural monopolies according to the "rate of return" criterion is likely to

A) reduce the incentive of firms to minimize cost.
B) result in a smaller quantity of output than when the natural monopolist is unregulated.
C) discourage the firms from investing resources in an effort to influence the decisions of the regulatory agency.
D) increase the number of firms in the industry.

Rate of Return

The increase or decrease in value of an investment throughout a determined period, shown as a percent of the investment’s initial cost.

Natural Monopolies

A market situation where a single supplier, due to unique resources, technology, or economies of scale, can provide a product or service at a lower cost than any potential competitor.

Regulatory Agency

A governmental body responsible for enforcing specific laws and regulations to protect public interest in areas such as health, safety, and the environment.

  • Comprehend the regulatory challenges and approaches for natural monopolies.
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Rafaela PangalanganDec 13, 2024
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