When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing
A) deregulation.
B) price cap regulation.
C) cost-plus regulation
D) regulatory capture rules.

Question

Quizplus · Accepted Answer

Price cap regulation is a method where the regulator sets a maximum price that a firm can charge for its products or services over a specific period. This approach is used to prevent monopolies from charging excessively high prices while still encouraging efficiency and cost reduction.

When the Regulator Sets a Price That a Firm Cannot