Charging more when its costs more to
Advantages of Peak-load
• He can earn supernormal profits.
• He can tap into the elastic market along
with the inelastic market situation during
• The average costs go down due to
economies of scale.
• They are charged lower prices during off-
• They can shift their demand to off-peak
seasons and thus pay a lower price for the
same good or service.
Disadvantages of Peak-load
• If a uniform price is charged for all times,
consumers usually buying during off-peak
times would refuse to pay a higher price.
Thus the producers would lose out on the
elastic demand market.
• The consumers can be exploited by the
producers during peak periods as the
demand is inelastic and the consumer has
• The producer earns supernormal profits in
the short run though his marginal costs are
relatively higher as output is high.
• The costs of production could decrease with
change in technology, inventions etc.
• The producers would thus earn supernormal
• The government would enjoy higher revenue
during peak periods.
• The stakeholders also benefit as they earn higher
total revenue if they were to sell at a uniform
• During peak periods, the producers are the
gainers while the consumers would lose out.
• During off-peak periods, the consumers benefit
while the producers could be the losers.