The regulatory lag:

A) always benefits the regulated firm.
B) is likely to occur with rate-of-return regulation.
C) promotes economic efficiency.
D) all of the above

Regulatory Lag

The delay between the identification of a need for regulatory intervention and the implementation of regulatory policies or actions.

Rate-Of-Return Regulation

Maximum price allowed by a regulatory agency is based on the (expected) rate of return that a firm will earn.

Economic Efficiency

A state where resources are optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.