when a regulatory agency uses rate of return regulation, the group of answer choices regulated firm's profit must be maximized for the market to be efficient. the agency is using a form of marginal cost pricing. firm's managers have an incentive to inflate the firm's costs. agency is able to eliminate the deadweight loss. regulated firm must receive a government subsidy.

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JakeMN8745 JakeMN8745

13-12-2022
Social Studies

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when a regulatory agency uses rate of return regulation, the group of answer choices regulated firm's profit must be maximized for the market to be efficient. the agency is using a form of marginal cost pricing. firm's managers have an incentive to inflate the firm's costs. agency is able to eliminate the deadweight loss. regulated firm must receive a government subsidy.

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contexto38 contexto38 · Answer 1 · 2022-12-17T12:25:09+01:00

Out of the choices provided above, it can be said that when a regulatory agency uses a rate of return regulation, the firm's managers have an incentive to inflate the firm's costs. Therefore, the option B holds true.

A regulatory agency can be referred to or considered as an agency that takes the responsibility of ensuring the compliance of all the rules and laws related to the procedural regulations. The regulations related to the rate of return allows the regulatory agency's management to incentivize the costs of the firm through inflation.

Learn more about a regulatory agency here:

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