A Price Cap Is a Price ________

Multiple Choice

A price cap is a price ________.A price cap might be a more effective way of regulating monopoly than rate of return regulation because under rate of return regulation,________.

A) ceiling;a firm incurs an economic loss
B) floor;price is set equal to marginal cost
C) ceiling;the firm's managers have an incentive to inflate costs
D) floor;the firm's managers have an incentive to purchase more than the efficient quantity of capital
E) floor;the firm's managers have an incentive to inflate costs