The special cost structure that is necessary for a firm to adopt a peak-load pricing policy is?
A)Economies of scale.
B)Economies of scope.
C)Constant marginal cost.
D)Limited capacity.

Question

Quizplus · Accepted Answer

Peak-load pricing policies require limited capacity because they involve charging higher prices during periods of high demand when the firm's capacity is strained. If the firm had excess capacity, it could simply produce more during peak periods to meet demand instead of increasing prices. Therefore, peak-load pricing policies make sense only when the firm has limited capacity. A, B, and C are not necessarily related to peak-load pricing policies.

The Special Cost Structure That Is Necessary for a Firm