The first unit of an information product is produced at a high fixed cost. Producing additional units entails relatively low

Question

Quizplus · Accepted Answer

Since producing additional units entails relatively low marginal and average variable cost, the best choice is B. This is because once the fixed cost has been incurred for the first unit, the variable cost of producing additional units is minimal. Therefore, the marginal cost (the cost of producing one more unit) and average variable cost (the variable cost per unit) are both low for additional units of the information product.

The First Unit of an Information Product Is Produced at a High