Regulating Natural Monopolies According to the "Rate of Return" Criterion

Regulating natural monopolies according to the "rate of return" criterion is likely to

A) reduce the incentive of firms to minimize cost.
B) result in a smaller quantity of output than when the natural monopolist is unregulated.
C) discourage the firms from investing resources in an effort to influence the decisions of the regulatory agency.
D) increase the number of firms in the industry.