The capacity decision in peak- load pricing is found by setting the peak marginal revenue equal to the long- run marginal cost.

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This is the basic premise of peak-load pricing, which aims to optimize the capacity of a facility (or system) to meet peak demand while minimizing costs over the long run. By setting the peak marginal revenue equal to the long-run marginal cost, the provider can maximize profits and ensure that demand is met without overbuilding capacity. This can be challenging, however, as it requires accurate forecasting of demand, as well as careful management of capacity and pricing strategies.

The Capacity Decision in Peak- Load Pricing Is Found by Setting