Question

A dilemma of regulation is that:a.regulated pricing always conflicts with the "due process" provision of the Constitution.b.the regulated price that achieves allocative efficiency is also likely to result in losses.c.the regulated price that achieves allocative efficiency is also likely to result in persistent economic profits.d.the regulated price that results in a "fair return" restricts output by more than would unregulated monopoly.

Answer 1

Answer: The correct answer is "b.the regulated price that achieves allocative efficiency is also likely to result in losses.".

Explanation: A dilemma of regulation is that the regulated price that achieves allocative efficiency is also likely to result in losses because the regulated price results in a dilemma because it can result in losses regardless of achieving the efficient allocation.