The marginal cost of providing another viewer with access to HBO is zero. Since only people who pay for HBO can watch it:
A)fewer than the socially optimal number of people will have access to HBO.
B)more than the socially optimal number of people will have access HBO.
C)HBO will not be profitable in the long run.
D)access to HBO is nonexcludable.

Question

Quizplus · Accepted Answer

The marginal cost of providing another viewer with access to HBO is zero. Since people have to pay for access to HBO, we know that the marginal benefit of providing another viewer with access is greater than zero. Since marginal benefit is greater than marginal cost, less than the socially optimal number of people will have access to HBO.

The Marginal Cost of Providing Another Viewer with Access to HBO