The market for lawn services is perfectly competitive. Larry's Lawn Service cannot increase its total revenue by raising its price because _______.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, individual firms face a perfectly elastic demand curve for their product or service, meaning consumers have perfect substitutes available and will switch to competitors if the price increases even slightly. Therefore, Larry's Lawn Service cannot increase its total revenue by raising its price because consumers would immediately switch to other providers, resulting in a loss of sales.

The Market for Lawn Services Is Perfectly Competitive