Answer to Question #323787 in Microeconomics for rubaiya

Question

 In a perfectly competitive market where there is virtually no product differentiation, what are the priorities or focus of a firm? How could a firm increase profits?

Answer 1

The entry to the maket is simple, so there is no any possibility to charge high prices. Any firm should charge the price at the level of equilibrium market prices. So, to increase profits the firm should decrease costs to the level that is lower than the competitors have. And increase it's market share due to different promotion.