If the first copy cost of a music video is $223,000 and the marginal cost is $0, then as the firm produces an infinite quantity of the video, the average total cost of producing the video will approach
A) zero.
B) $1.00.
C) $2,230.
D) $1 million.

Question

Quizplus · Accepted Answer

In the long run, as the firm produces an infinite number of videos, the fixed cost will be spread out over an infinite number of videos, causing the average total cost to approach zero. Additionally, since the marginal cost is zero, the increase in total cost for each additional unit produced is also zero, reinforcing the tendency for average total cost to approach zero.

If the First Copy Cost of a Music Video Is