Under rate of return regulation, a regulated firm has an ...

[jace]

Under rate of return regulation, a regulated firm has an incentive to
 
  A) use an efficient amount of capital.
  B) set its price equal to its marginal cost.
  C) hide losses from bad debts.
  D) inflate its costs.

Question 2

Rate of return regulation is most similar to
 
  A) a marginal cost pricing rule.
  B) an average cost pricing rule.
  C) an average variable cost pricing rule.
  D) an inflation cost pricing rule.

[efwsefaw]

Answer to Question 1

D

Answer to Question 2

B

[jace]

TYSM

[Viet Thy]

Gracias!