Sarita signed up with Netflix for a fixed fee of $16.99 per month. For this fee,

Question

Sarita signed up with Netflix for a fixed fee of $16.99 per month. For this fee, she can receive up to 3 DVDs at a time in the mail and exchange each DVD as often as she likes. She also receives unlimited instant access to movies being streamed from Netflix to her computer or TV. During the average month in 2010, Sarita received and watched 6 movies sent to her through the mail and she watched an additional 13 movies which were streamed to her computer. What is the average cost of a movie to Sarita?

Explanation / Answer

average cost of a movie to Sarita= 16.99/(6+13)=.8942 he marginal cost of an additional movie= $0, Since Sarita pays a fixed fee per month, she can spend as much or as little time as she wants on-line. Another movie does not cost her any more.

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