Which of the Following Is a Possible Negative Result of a Policy

Multiple Choice

Which of the following is a possible negative result of a policy of average-cost pricing as a method of regulating a natural monopoly?

A) economic losses will accumulate over time to unsustainable levels
B) taxpayers will have to subsidize the economic losses of the regulated monopoly
C) the regulated monopoly earns unreasonable profits
D) socially desirable capital investment may not occur
E) the induced technological change leads to more industries becoming natural monopolies