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AP® Microeconomics

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Moderate

Drawbacks of Price Regulation

APMICR-YWGGKD

One drawback of monopoly price regulation is that it

A

reduces the firm’s profit by raising its marginal cost.

B

suppresses the demand for the firm’s product.

C

may require subsidies to keep the firm viable in the long run.

D

lowers barriers for competitors to enter the market.

E

reduces the firm’s profit by raising its average total cost.