One problem with regulating a monopolist on the basis of costis that a. regulato

Question

One problem with regulating a monopolist on the basis of costis that a. regulators are unable to effectively control prices and/orproduction. b. it does not provide an incentive for the monopolist toreduce its cost. c. a monopolist's costs, by definition, are higher than costsof perfectly competitive firms d. a monopolist is still able to generate excessive economicprofits. One problem with regulating a monopolist on the basis of costis that a. regulators are unable to effectively control prices and/orproduction. b. it does not provide an incentive for the monopolist toreduce its cost. c. a monopolist's costs, by definition, are higher than costsof perfectly competitive firms d. a monopolist is still able to generate excessive economicprofits.

Explanation / Answer

B. it does not provide an incentive for the monopolist to reduceits cost.

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