When a regulatory agency uses rate of return regulation, the ...

[fox]

When a regulatory agency uses rate of return regulation, the
 
  A) agency is able to eliminate the deadweight loss.
  B) firm's managers have an incentive to inflate the firm's costs.
  C) regulated firm's profit must be maximized for the market to be efficient.
  D) regulated firm must receive a government subsidy.
  E) the agency is using a form of marginal cost pricing.

Question 2

Refer to the figure above. When the demand curve for gas is D1 and the supply curve for gas is S, the equilibrium price is:
 
  A) 3.
  B) 5.
  C) 6.
  D) 8.

[medine]

Answer to Question 1

B

Answer to Question 2

B

[fox]

Thanks for the timely response, appreciate it

[shailee]

Excellent