Which of the following is a true statement about the process of cross-subsidization, given a firm is selling two products?
A)The two products can not have interdependent demand functions.
B)The firm will sell both of its products at prices set above costs.
C)The firm needs cost complementarities in the production of the two goods.
D)The firm will sell both of its products at prices set above costs and the firm needs cost complementarities in the production of the two goods.

Question

Quizplus · Accepted Answer

Cross-subsidization often involves cost complementarities, where the cost of producing two goods together is less than producing them separately, allowing the firm to subsidize one product with the profits from another.

Which of the Following Is a True Statement About the Process