Final answer:
Firms in a perfectly competitive market cannot achieve a competitive advantage by raising prices because customers can easily find identical products at lower prices from numerous competitors, which would result in the firm losing sales.
Step-by-step explanation:
In a perfectly competitive industry, firms have difficulty achieving competitive advantage. The reason for this is the nature of perfect competition, where there are many sellers in the market offering homogeneous products, making it difficult for any single firm to increase prices above the market equilibrium as buyers can easily switch to competitors offering lower prices. Additionally, barriers to entry are usually low, allowing for new firms to enter the market if existing firms attempt to gain excess profits, thus maintaining competitive pricing.
Firms in perfectly competitive markets cannot simply raise their prices to increase profits because doing so would drive away customers to their many competitors who are offering identical products at a lower cost. Consequently, businesses in this market structure tend to earn just enough profit to stay operational, known as normal profit. Attempting to charge higher prices would not result in higher profits but could instead lead to a total loss of sales.