Hello,

costs of creating the product
marketing of promotional material costs of distribution
eg. Netscape allowing you to download instead of waiting to get the CD by mail
costs of processing (orders from the customers)
repeat activities and information processing
of handling customer phone calls of handling sales inquiries
determine product availability (inventory management)
costs of storing information
lowers telecommunication costs

Thank you
Nadia

Hello,

A decreasing cost industry is one where costs decrease as the industry expands. In this case the industry's long run supply curve slopes downward: as the industry produces more output, the minimum average cost of production for each firm decreases with the decrease in costs (see long run cost curves). Firms in a decreasing cost industry do not necessarily have economies of scale in production; the decrease in costs may reflect lower input costs which reduce the minimum point of the average total cost curve as the industry grows.Input costs may decline as the industry expands if there are economies of scale in the production of an important input. For example, economies of scale in the production of computer chips allow personal computer manufacturers to produce more computers at lower cost as chip prices fall. An industry may also experience decreasing cost if there are “economies of agglomeration.” These economies can occur when a number of firms produce in a specific geographic area and, as their number grows, supporting services such as transportation can be provided to all firms at lower cost. Again, this lowers each firm's costs as the industry grows and so the minimum point on the average cost curve where there are zero economic profits is lower.

Thanks,
Amy