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 policy involves charging higher prices during periods of high demand and lower prices during periods of low demand. This requires the firm to have limited capacity, as it cannot easily increase supply to meet the peak demand. Therefore, choice D, limited capacity, is necessary for a firm to adopt a peak-load pricing policy. Choices A, B, and C are not related to peak-load pricing policy.

The Special Cost Structure That Is Necessary for a Firm