per unit would be required to cover all costs; in contrast, if 2.5
million units could be sold, any price above $3 per unit would
fully cover costs and generate economic profits as well.
Most firms with cost structures of this kind are producing and
selling products that are considerably differentiated from those
of their corporate rivals. We will see in Chapters 10 and 11
how this differentiation gives firms the ability to influence their
own prices. Until then, the central message is simple: Many
digital products have constant and near-zero marginal costs
and so are a good example of settings where diminishing
marginal returns are not present.