With nonrivalrous consumption, such as in the case of online music and movies, as more consumers buy the product,
A)the average cost of the output declines because the marginal cost is very small.
B)marginal cost is low, but the average cost of the output will be rising.
C)the average cost of the output will be rising because marginal cost is quite high.
D)marginal cost is quite high, but the average cost of the output will be declining.

Question

Quizplus · Accepted Answer

Nonrivalrous consumption means that one person's consumption of a good does not reduce the amount available for others. For digital goods like online music and movies, the marginal cost of serving an additional consumer is very small, almost zero. Therefore, as more consumers buy the product, the average cost of the output declines because the initial production and distribution costs are spread over a larger number of consumers.

With Nonrivalrous Consumption, Such as in the Case of Online