Question

In the United States, the Postal Service has a monopoly on first-class mail, but much of what is sent first class could be transmitted electronically. Electronic transmittal operators argue that if the Postal Service were to offer electronic transmission, it would have an unfair advantage, since its electronic transmission service could be subsidized from the profits of the monopoly.

Which of the following, if each is true, would allay the electronic transmittal operators’ fears of unfair competition?

• A. If the Postal Service were to offer electronic transmission, it could not make a profit on first-class mail.
• B. If the Postal Service were to offer electronic transmission, it would have a monopoly on that kind of service.
• C. Much of the material that is now sent by first-class mail could be delivered much faster by special package couriers, but is not sent that way because of cost.
• D. There is no economy of scale in electronic transmission—that is, the cost per transaction does not go down as more pieces of information are transmitted.
• E. Electronic transmission will never be cost-effective for material not sent by first class mail such as newspapers and bulk mail

Answer 1

The correct option is A If the Postal Service were to offer electronic transmission, it could not make a profit on first-class mail.

Option (a) is the correct answer. Check the video for the approach.