A private regulated monopolist that is allowed to charge a price equal to his explicit costs plus a normal rate of return is experiencing
A) cost-minus regulation.
B) cost regulation.
C) economic profits.
D) cost-plus regulation.
E) economic regulation.

Question

Quizplus · Accepted Answer

Cost-plus regulation is when a private regulated monopolist is allowed to charge a price equal to his explicit costs plus a normal rate of return. This ensures that the firm can cover its costs and earn a reasonable return while preventing it from charging excessive prices.

A Private Regulated Monopolist That Is Allowed to Charge a Price