In rate-of-return regulation,a monopoly is required to have zero
A) profit.
B) rent.
C) producer's surplus.
D) deadweight loss.

Question

Quizplus · Accepted Answer

In rate-of-return regulation, the regulator sets a fixed rate of return that a monopoly is allowed to earn on its capital investment. This means that the monopoly is allowed to earn enough revenue to cover its operating costs and also earn a reasonable return on its investment, but not to earn any excess profits or rent. Therefore, the correct choice is (A): profit.

In Rate-Of-Return Regulation,a Monopoly Is Required to Have Zero