If a firm faces a high demand during the summer months and a low demand during the winter months, peak- load pricing can increase the firm's profits compared to charging the same price in the summer and winter months.

Question

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Peak-load pricing involves charging higher prices during times of high demand and lower prices during times of low demand. By adopting this pricing strategy, the firm can maximize its profits during the summer months when demand is high and charge lower prices during the winter months to maintain demand. This can result in higher overall profits compared to charging the same price year-round.

If a Firm Faces a High Demand During the Summer