When a firm produces an information product the initial or fixed costs are low low or high unpredictable high . Part 2 Consequently the average fixed cost and average total cost increase decrease change are constant 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 total average marginal cost of producing more units of the product are typically low and increasing decreasing constant . Part 4 In this case, then, the low and constant marginal cost is below equal to above 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 economic profits normal profits economic losses Part 6 since the marginal cost is greater than less than equal to the average cost