Why does the rate of return (RoR) regulation stimulate more than the efficient level of capital investment from the regulated utilities companies? a. A state government directly subsidies capital investments. b. The capture effect rewards capital investment more than other types of investment. c. The RoR is applied to the rate base, which includes capital but not operating costs. d. Regulator salaries increase as capital increases.

Why does the rate of return (RoR) regulation stimulate more than the efficient level of capital investment from the regulated utilities companies? a. A state government directly subsidies capital investments. b. The capture effect rewards capital investment more than other types of investment. c. The RoR is applied to the rate base, which includes capital but not operating costs. d. Regulator salaries increase as capital increases.

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter10: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 10CQ

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