Answer to Question #317803 in Microeconomics for Welcome

Question

State any two ways that firms operating under perfect competition can use to increase their profit since they cannot temper with price and quantity

Answer 1

A perfect competition is a sort of market rivalry in which there are numerous producers and consumers, and no single company may influence their pricing.

To maximize profit, in a completely competitive market, firms set marginal revenue equal to marginal cost (MR=MC)

Secondly, when the price exceeds the average total cost, the company makes a profit but when the price falls below the average total cost, the company makes loses.