Why would a profit-maximising firm in a competitive market set a price higher than the market price?

Question

Quizplus · Accepted Answer

A profit-maximizing firm in a competitive market will always set the price at the market price or lower to avoid losing customers to competitors. Setting a price higher than the market price would result in a decrease in demand and lower profits, which is not in the best interest of the firm. Additionally, increasing the price to increase market share would not be a profitable strategy in a competitive market, as other firms would be able to match or undercut the price. Therefore, none of the options provided would lead a profit-maximizing firm in a competitive market to set a price higher than the market price.

Why Would a Profit-Maximising Firm in a Competitive Market Set