honeycfa

Regulations are frequently implemented that attempt to deal with markets with high barriers to entry. Which statement is least likely to be a reason why they often fail?

A) Due to regulation, a firm has little incentive to control costs as the costs can be shifted to consumers via a price increase.

B) An existing firm in the industry is able to influence the regulatory board.

C) Regulators prevent monopolists from making a profit.

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Regulators do not seek to prevent monopolists from making a profit. Instead using average cost pricing, regulators will try to prevent monopolists from making a zero economic profit and ensure the monopolist a normal profit. Both remaining choices are reasons why regulations can fail.