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content area Part 1 When a firm produces an information product the initial or fixed costs are . Part 2 Consequently the average fixed cost

content area Part 1 When a firm produces an information product the initial or fixed costs are . Part 2 Consequently the average fixed cost and average total cost decrease are constant change increase as the volume of output increases. Part 3 Since most of the costs are the initial fixed costs of development, once the product is developed, the average total marginal cost of producing more units of the product are typically low and decreasing increasing constant . Part 4 In this case, then, the low and constant marginal cost is below above equal to the average cost. Part 5 If the firm set the price, or average revenue, of the product equal to the marginal cost, the firm would have normal profits economic profits economic losses Part 6 since the marginal cost is greater than less than equal to the average cost

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