Multiple Choice
Which of the following is not a problem faced by regulators while regulating a natural monopoly such as cable television or electric utility company?
A) Regulators lack sufficient information regarding the monopolists cost structure.
B) Regulation reduces the incentive for the monopolist to reduce costs.
C) Regulation may cause the monopolist to suppress innovation and new product development.
D) Regulation of a monopoly usually leads to a decline in total surplus.
Correct Answer:
Verified
Correct Answer:
Verified
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