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 the marginal cost of producing an additional unit of the product is very small or almost zero. Therefore, as more consumers buy the product, the average cost of the output declines because the fixed costs are spread out over a larger number of customers.

With Nonrivalrous Consumption, Such as in the Case of Online