If a multi- plant firm has market power, to maximize profit, it should set a price that exceeds its overall marginal cost.

Question

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If a multi-plant firm has market power, it can charge a price higher than its marginal cost without losing all of its customers. This is because the firm's customers do not have many other alternatives to purchase the same product. By setting a higher price, the firm can maximize its profit margin. However, if the price is too high, it may attract new competitors who can offer a lower price to capture some of the market share. The optimal price point for a multi-plant firm with market power is where the marginal revenue equals the marginal cost, which will result in the highest level of profit.

If a Multi- Plant Firm Has Market Power, to Maximize