1. The problem statement, all variables and given/known data I have always learnt (and read) that an increase in the number of bits causes the height of the 'step' on the graph to decrease. I tried to think about it but cannot come up with a proper explanation for this. THe books I read do not explain why? Can someone please explain in detail? 2. Relevant equations No equation required, I think 3. The attempt at a solution I think that more bits allow us to carry more information. But how does this decrease the height? Won't the difference in levels be the same. It's only more information can be carried. For example, the difference between level 10 and level 3 would still be the same no matter what the maximum level is, right? In all books, it says that increase the number of bits decreases the step height, but should it be increasing the sampling rate that does this. Anyway, how does increasing the sampling rate affect the signal then?