Incorrect Question 4 0 / 10 pts In cost plus regulation, regulators calculated the average cost of production, added in an amount for the normal rate of profit the firm should expect to earn, and set the price for consumers accordingly. In price cap regulation, the regulator sets a price that the firm can charge over the next few years. What is the problem of price cap regulation? It will not work if the price regulators set new prices every six months. Regulators would not force price changes that often. Learning Objective: Contrast cost-plus and price cap regulation It will cause long term certainty in the market. Low level managers will have too much power. It will not work if the price regulators set the price cap unrealistically low