Compared to an Unregulated Firm,a Cost-Plus Regulated Firm Has a Smaller

Multiple Choice

Compared to an unregulated firm,a cost-plus regulated firm has a smaller incentive to pursue cost-saving innovations because

A) few cost-saving innovations exist for natural monopolies.
B) the reduction in costs never improve profitability.
C) the regulators refuse to allow the firm to adopt the innovation.
D) regulated firms do not seek to maximize profits.
E) the reduction in costs ultimately results in a reduction in the regulated price.