Question

Take a look at Figure 23-3. This figure uses the data in the table from Figure 23-2, which indicates that the area of the blue rectangle displaying hourly economic profits is $5 per period. What prevents this firm from continuing to produce the same number of units per hour but raising the price that it charges for each unit in order to enlarge the area of the profit rectangle?

Short answer

The qualities of perfect competition are there are numerous purchasers and vendors, and the organizations got the opportunity to section and leave significance whenever, another firm can go into the market or a current firm can leave the market.

Step-by-step solution

Introduction

In a perfectly competitive market, there is the opportunity for passage and exit for firms. In the event that there is a possibility of creating gains, new firms go into the business. Then new firms will create gains and drop the market cost. The perfect competition is a simply serious market type selling homogenous items in the market.

Explanation

From the given figure we can find, at the market cost of the firm creates a little gain. On the off chance that they can raise their value, they can procure supernormal benefits which are beyond the realm of possibilities. In the perfect competition, there is the opportunity of passage and exit so on the off chance that there is any supernormal benefit accessible, the new firms enter until there is ordinary benefit in the economy.