If the market price for multi- plant, perfectly competitive firm is $4, to maximize its profits, the firm should set the overall marginal cost of production equal to $4.

Question

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In perfect competition, firms operate at the point where marginal cost equals price (MC=P) to maximize their profits. Since the market price for the multi-plant firm is $4, setting the overall marginal cost of production equal to $4 will result in the highest possible profits for the firm.

If the Market Price for Multi- Plant, Perfectly Competitive Firm