True or false: A digital good distributed via the web has a marginal cost of zero.
  1. True
  2. False
Explanation
Answer: True. There is no cost to copying a digital good, so the cost of producing the next unit is zero. The exception is high bandwidth digital goods such as video. Then the cost of data transfer might be substantial enough to factor into your consideration.

Key Takeaway: This has major pricing implications. It means that you are essentially trying to maximize revenue when selling a digital good, since cost will always be zero.
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