Roughly speaking, peak-load pricing makes users at peak times pay for capacity while users at off-peak times pay only for operating cost
Indicate whether the statement is true or false
T This statement is roughly true. But as Section 11.1 shows, it does not hold in all cases. Sometimes peak and off-peak prices must be set so users share capacity cost and capacity is fully used at all times.
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Sunk costs
A) are costs that firms sink into marketing. B) are important for optimal decision making. C) are costs associated with repairing something you already own. D) are costs that have already been paid and cannot be recaptured in any significant way.
A decline in Tobin's q can be caused by ________
A) a rise in the market value of a firm B) an increase in stock prices C) a decline in stock prices D) a decline in the replacement cost of capital
In New York City, you need a license to drive a taxicab. Each license is valid for three years, and then it expires. The holder of a license can expect to earn $10,000 in profit each year. If the interest rate is 5 percent (0.05) per year, what is the value of a newly issued taxicab license? (Assume that each year's profit is received at the end of the year.)
a. $1,990.74 b. $10,000.00 c. $14,074.07 d. $27,232.48 e. $30,000.00
Which of the following best explains why high marginal tax rates retard output?
a. High marginal tax rates reduce the incentive to earn, invest, and use resources efficiently. b. High marginal tax rates will encourage foreign investment. c. High marginal tax rates will reduce budget deficits and lower interest rates. d. High marginal tax rates encourage people to substitute more-desired nondeductible goods for less-desired tax-deductible goods.