-A Regulated Firm May Have an Incentive to Spend an Inefficiently

Multiple Choice

-A regulated firm may have an incentive to spend an inefficiently high amount on capital when:

A) it becomes deregulated.
B) fair rate of return regulation is used.
C) regulators set price equal to marginal cost.
D) it is part of a monopolistically competitive industry.
E) it is allowed to charge a monopoly price.