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Which of the Following Is Not a Problem Associated with Regulation

Question 43

Multiple Choice

Which of the following is not a problem associated with regulation of a natural monopoly?


A) Regulation using average-cost pricing reduces a firm's incentive to keep costs down.
B) Regulation stifles the incentive that firms have to innovate.
C) Regulators do not have full information about a firm's demand and cost functions.
D) Regulation increases collusion and cartelization among firms.

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