There are different ways that firms to make profits. When profit-maximizing firms in perfectly competitive markets are earning economic profits, new firms will enter the market.
- Profit maximization is simply known to be the short run or long run method through which firms can know the price, input and output levels that tends to lead to the highest profit.
For profits to be maximize in a perfectly competitive market, firms have to make the marginal revenue equal to marginal cost (MR=MC). MR is known to be the slope of the revenue curve that equal to the demand curve (D) and price (P).
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