One of the tendencies that is common among firms regulated using rate of return regulation is to
A) increase production to an inefficient level.
B) inflate the costs of production.
C) incur an economic loss.
D) understate the costs of production.
E) overstate their total revenue.
Question 2
A seller who continues to earn the same gross revenue from sales whether she raises or lowers her prices faces a demand curve that
A) contradicts the law of demand.
B) is completely elastic.
C) is completely inelastic.
D) is unit elastic.
E) is vertical.
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