The efficiency gains from peak-load pricing depend largely upon:
A)the amount of regulation in the market.
B)the ability of users to cut back on consumption during peak periods.
C)the pricing strategy followed by the firm in the past.
D)the productivity of the inputs used in producing the output.

Question

Quizplus · Accepted Answer

Peak-load pricing is a strategy in which prices are raised during peak demand periods to encourage consumers to cut back on consumption and shift their usage to off-peak periods. Therefore, the efficiency gains depend largely on the ability of users to reduce their consumption during peak periods, which is the case described in option B. Options A, C, and D are not directly related to the efficiency gains from peak-load pricing.

The Efficiency Gains from Peak-Load Pricing Depend Largely Upon