Quote:
Local phone companies have monopolies on phone service within their areas. Cable television can be transmitted via the wires that are already in place and owned by the phone companies. Cable television companies argue that if the telephone companies were to offer cable service, these telephone companies would have an unfair advantage, because their cable transmissions could be subsidized by the profits of their monopolies on phone service.
On the basis of the information provided in the passage above, which of the following questions can be answered?
(A) Are phone companies as efficient as cable companies in providing reliable and inexpensive service?
(B) If phone companies were allowed to provide cable service, would they want to do so?
(C) Do the cable companies believe that the local phone companies make a profit on phone service?
(D) Are local phone companies forbidden to offer cable service?
(E) Is it expected that phone companies will have a monopoly on cable service?
Fact: Local phone companies have monopolies on phone services.
Fact: Cable TV can be transmitted via the phone companies’ existing infrastructure.
Fact: Cable companies argue that if the telephone companies also offered cable service, the phone companies would have an unfair advantage, because their TV transmissions could be subsidized by the existing phone monopoly.
A. This can’t be answered. Reliability isn’t mentioned.
B. This can’t be answered. We haven’t heard from the phone companies at all, only the cable companies.
C. This is a yes. If the cable companies think the phone companies will enjoy a subsidy from their phone monopoly, then they must think that the phone monopoly is profitable.
D. This can’t be answered. Though it might seem like a no since the cable companies are getting worked up over it, it’s never actually established.
E. This can’t be answered. Just because they have a monopoly on one thing, that doesn’t guarantee a monopoly on this other thing.
Best answer is C.