Shifting demand from peak to off-peak periods is beneficial if the discount given
A)during the off-peak period is more than offset by the decrease in cost because of a larger peak.
B)during the off-peak period is more than offset by the decrease in cost because of a smaller peak.
C)during the peak period is more than offset by the decrease in cost because of a smaller peak.
D)during the peak period is more than offset by the decrease in cost because of a larger peak.

Question

Quizplus · Accepted Answer

Shifting demand from peak to off-peak periods is beneficial only if the discount given during the off-peak period is more than offset by the decrease in cost because of a smaller peak. This is because it is not guaranteed that there will be a larger peak during the off-peak period, so it is more beneficial to focus on decreasing the peak during the peak period. Therefore, the discount during the off-peak period should be significant enough to incentivize customers to shift their demand, while also resulting in a smaller peak during the peak period which leads to cost savings.

Shifting Demand from Peak to Off-Peak Periods Is Beneficial If