Question

creating the first copy of an information product often entails incurring a relatively sizable up - front cost.
a. true
b. false
for the producer of an information product, marginal cost is
a. constant.
b. less than average total cost.
c. equal to average variable cost.
d. all of the above.

Explanation:

First Question (True/False)

Information products (like software, e - books) have high fixed costs for the first copy (e.g., development, research). So creating the first copy has a large up - front cost.

• For information products, marginal cost (cost of an additional unit) is often constant (e.g., copying a software or e - book has a near - zero constant cost).
• Marginal cost is less than average total cost because average total cost includes the high fixed cost, and marginal cost (low) will be less than it.
• Marginal cost equals average variable cost as variable cost per unit is constant (since marginal cost is constant), so average variable cost (total variable cost/quantity) is equal to marginal cost. Thus, all options A, B, C are correct.

Answer:

A. True

Second Question (Multiple Choice)