____________ regulation is based on setting the price of, say, water or electricity, at the average cost of production while allowing a normal profit for the firm.
a. Price cap
b. Cost-plus
c. Fixed price
d. Bundling
b. Cost-plus
Regulators of public utilities for many decades calculated the average cost of production for the water or electricity companies, added in an amount for the normal rate of profit the firm should expect to earn, and set the price for consumers accordingly. This method was known as cost-plus regulation.
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A compensated demand curve contains no
a. income effects. b. substitution effects. c. price elasticity. d. income compensation.
Over the past several decades, the United States has devoted a greater fraction of its resources to consumption than Hong Kong, which is why the U.S. economy grew faster than Hong Kong's economy
Indicate whether the statement is true or false
The major protection against sudden mass attempt to withdraw cash from banks is the:
A. Federal Reserve. B. Consumer Protection Act. C. deposit insurance provided by the FDIC. D. gold and silver backing the dollar.
Which of the following is an example of an external benefit?
A. A company opens a slaughterhouse at the end of your street. B. Firms are able to reduce their costs of production by using a more efficient technology. C. The city spends $500,000 to upgrade the local jail. D. More people start to install solar panels on their roofs, and as a result, electricity use goes down as does the pollution created by the generation of electricity.