Cross-Subsidization Occurs When

question 102

Multiple Choice

Cross-subsidization occurs when

• A) Profits on one product are used to subsidize low prices on another product.
• B) The government subsidizes production of a product.
• C) Profitable firms in an industry are forced to share their profits with the unprofitable firms.
• D) Firms are required to subsidize government research and development that may benefit their industry. Cross-subsidization is the use of high prices and profits on one product to subsidize low prices on another product.

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Definitions:

Implied Warranty

A legal assumption that a product will meet certain standards of quality and reliability without being explicitly stated.

Confusing

Something that is difficult to understand or makes one perplexed.

Implied Warranty

A legal doctrine that guarantees that a product or service will meet certain minimum standards of quality and functionality, even if not expressly stated.

Assurances

Statements or actions intended to provide confidence or certainty about a condition or result.