Under Incentive Regulation, a Natural Monopoly

Multiple Choice

Under incentive regulation, a natural monopoly

A) can raise its price if its average total cost rises above its regulated price.
B) cannot distribute some profits to a worker whose innovation lowered the firm's average total cost.
C) must lower its price if its average total cost falls below its regulated price.
D) would strive to achieve average total cost lower than the regulated price.
E) can disregard sloppy work or less innovative management.