Final answer:
A firm is more likely to set a profit objective for toothpaste since it can differentiate and have control over its pricing, unlike commodities or fad items.
Step-by-step explanation:
When it comes to price planning, a firm is more likely to set a profit objective for products where it has some control over the pricing.
Toothpaste, which can be differentiated by brand, quality, features, and marketing, allows a firm to set a profit objective because the firm can influence consumer preference and has some pricing power.
A commodity like coal, light bulbs, and construction materials typically have little differentiation, so firms in these markets are price takers. Prices are set by the market, not the individual firms.
Fad items like Beanie Babies might allow for profit objective setting during the height of their popularity, but this isn't sustainable long-term due to the volatile nature of fad products.
A perfectly competitive firm mainly focuses on the quantity to produce since they cannot set prices above the market equilibrium. Profit in this context is the difference between total revenue and total cost, both of which are functions of quantity produced and market price.