The goal for a profit maximizing firm is easily stated, to increase profit now and in the future.
In the short run, it would be profit maximizing to acquiesce and share the market with the new entrant.
As always, the profit maximizing point lies at the very top for the curve.
A change in fixed costs has no effect on the profit maximizing output or price.
Consequently, the profit maximizing point would remain the same.
"The key is finding a profit maximizing price that consumers find worthwhile."
A firm with monopoly power setting prices will typically set price at the profit maximizing level.
Yet this is a profit maximizing solution to this situation.
A company that does not engage in price discrimination will charge the profit maximizing price, P*, to all its customers.
The degree to which a firm can raise price above marginal cost depends on the shape of the demand curve at the profit maximizing output.