Before the breakup of AT&T several years ago, profits on long-distance calls offset losses on basic residential service.This practice is known as
A)abuse of monopolistic power.
B)cream skimming.
C)cross-subsidization.
D)the Ramsey rule.

Question

Quizplus · Accepted Answer

Cross-subsidization is the practice of using profits from one product or service to subsidize the cost of another product or service within the same company. In the case of AT&T, profits from long-distance calls were used to offset losses on basic residential service, allowing the company to offer both services at affordable prices to customers.

Before the Breakup of AT&T Several Years Ago, Profits on Long-Distance