Regulating an industry to remove all economic profit
A)removes all incentive for efficiency and responsiveness to consumer demand.
B)removes distortions caused by cross subsidies.
C)removes allocative inefficiency.
D)increases incentives to be productively efficient.

Question

Quizplus · Accepted Answer

Removing all economic profit eliminates the incentive for businesses to be efficient and responsive to consumer demand, as there is no reward for doing so.

Regulating an Industry to Remove All Economic Profit