Author Question: When a regulatory agency uses rate of return regulation, the A) agency is able to eliminate the ... (Read 217 times)

fox · **on:** Jun 29, 2018

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.