A regulatory agency that requires a firm to provide "universal service" must
A)prevent high profits in all markets.
B)allow the firm to cross-subsidize.
C)prevent cross-subsidization.
D)guarantee marginal cost pricing.

Question

Quizplus · Accepted Answer

Requiring a firm to provide universal service means that it must offer its services to all consumers at a reasonable rate, even if it is not profitable to do so. Allowing the firm to cross-subsidize means that it can use the profits from its profitable markets to finance its unprofitable universal service obligations. This helps to ensure that the firm can continue to offer universal service without suffering financial losses.

A Regulatory Agency That Requires a Firm to Provide "Universal