Problem:
In the first half of the twentieth century, AT&T had a near monopoly on local and long distance phone service. The firm charged a price for local telephone services that was roughly one-half of its cost of providing the services. In contrast, it charged almost two times it cost for long distance services. Why do you think AT&T adopted this pricing strategy?
Briefly explain why a used recreational vehicle (RV) that is only six months old and has been driven only 10,000 miles typically depreciates and costs at least 20 percent less than a new RV with the same options. Use pricing strategy and managerial economics to support your answer.