a. What's wrong with this line of reasoning? The goal of firms is to maximize profits, not output. Selling more units without end will eventually reduce profits. h. Why do monopolistic industries sell less than competitive industries? In perfectly competitive industries, output is determined by the intersection of supply and marginal cost. Each firm faces a horizontal demand curve, which is also its supply curve. Each will maximize profits by setting output where MR = MC This also means PMC in perfectly competitive. industries.