Which of the Following Is an Example of Government Regulation

Multiple Choice

Which of the following is an example of government regulation of a natural monopoly distorting incentives?

A) A natural monopoly is held to average-cost pricing; therefore, it has little incentive to hold costs down.
B) A natural monopoly is protected from competitors; therefore, it is rude to its customers.
C) A natural monopoly is protected from competitors; therefore, it doesn't care much about the quality of the product it sells.
D) a and c
E) a, b, and c