______ tends to reduce the incentives for public utilities to contain costs, because the firm realizes essentially the same profits regardless of its efforts.

Question

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Fair-return pricing, often used in regulated industries like public utilities, allows firms to set prices that cover their costs plus a reasonable profit. This approach can reduce the incentive for cost containment since profits are assured as long as costs are deemed reasonable, leading to potential inefficiencies.

______ Tends to Reduce the Incentives for Public Utilities to Contain