A multiplant firm has equated marginal costs at each plant. By doing this:

Question

Quizplus · Accepted Answer

Equating marginal costs at each plant ensures that the firm is producing at the minimum total cost for the given level of output. This is because marginal cost represents the additional cost of producing one more unit of output, and if the firm is producing at different marginal costs at different plants, it is not using its resources efficiently. Therefore, by equating marginal costs at each plant, the firm is minimizing costs for the given level of output.

A Multiplant Firm Has Equated Marginal Costs at Each Plant