Chapter 9, Problem 4AA

To determine

To find: The correct word that completes the sentence.

Answer to Problem 4AA

The correct word is prohibit.

Explanation of Solution

In perfect competition, there are no limitations on the entry and exit of the new sellers in the market. They are freely allowed to enter the market and leave whenever they want to which means that when the industry is earning profits, some new firms can enter the market lured by such profits without any hassles and at the same, if the industry is facing losses, the firms are permitted to easily leave the market.

Economics Concept Introduction

Introduction: Competition refers to the rivalry between market forces which can be companies, firms or even small sized local stores. The competition is usually between the market forces selling similar or identical goods or services