For a price-taking firm in a competitive market,the firm's only way to increase profitability is to

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Since a price-taking firm in a competitive market cannot change the market price, the only way to increase profitability is to reduce production costs. This would allow the firm to earn a larger profit margin on each unit sold at the fixed market price. Advertising more or changing price would not have a significant impact on the firm's profitability since all competitors are selling at the same price. Exiting the industry or increasing revenue may not be feasible or practical options.

For a Price-Taking Firm in a Competitive Market,the Firm's Only