Final answer:
A monopolistically competitive firm can profitably meet increased demand at a fixed price due to demand elasticity and some price control, while a perfectly competitive firm has limited ability to raise profits by selling more.
Step-by-step explanation:
A monopolistically competitive firm can profitably meet demand at a fixed price even when actual demand is greater than anticipated because it operates under the assumption of demand elasticity and has some control over its pricing, unlike a perfectly competitive firm. Even though a perfectly competitive firm can sell as much as it wants at the market price, increasing profits by selling an extremely high quantity is not always possible due to the nature of the perfectly elastic demand curve the firm faces. This means that all firms will sell at the market price and any attempt to increase price will result in losing all customers.
For a perfectly competitive firm, the quantities sold at any given price do not affect the market price; therefore, the firm's profits are maximized when the marginal cost equals marginal revenue. If a firm increases output to an extent where the marginal cost exceeds marginal revenue, the firm would then incur losses on additional units produced. Thus, the profit-maximizing condition in a perfectly competitive market does not allow a firm to increase profits indefinitely simply by increasing the quantity.