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Capacity constraint and constant marginal cost

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Reference no: EM132149708

Peak load pricing for a seller with a capacity constraint and constant marginal cost up to capacity typically requires:

-Ensuring that marginal revenue is equal for the peak and non-peak periods.

-Setting the price in the peak period such that consumer demand exceeds capacity.

-Pricing such that marginal revenue in the off-peak period is less than or equal to marginal revenue in the peak period.

-Pricing such that demand is inelastic in the peak period.

Reference no: EM132149708

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