Question

The marginal cost of supplying an episode of a TV show on Netflix is essentially zero....

The marginal cost of supplying an episode of a TV show on Netflix is essentially zero. Thus, Netflix allows subscribers to stream episodes for free after paying a subscription fee. Recorded TV episodes are an example of a

A) private good

B) club good

C) common resource

D) public good

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Answer #1

Option B.

  • There recorded TV episodes after paying the subscription fee in Netflix are an example of a club good.
  • This is because they are non rival but excludable in nature.
  • It is excludable as only those who have paid the fee can watch the recorded episodes while those who haven't paid cannot.
  • It is non rival in nature as its value does not diminish even if many people are viewing the recorded episodes all over the world after paying the subscription fee.
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