econs

Firstly, I want to clarify what the meaning of economic profit is. If it is in the accounting sence, ie. The revenues exceed the total price the firm pays for those inputs revenues exceed the total price the firm pays for those inputs, the profit of $25 seems to be small to have any attraction/

But I think you want to discuss with the definition in Economic sense, a firm is said to be making an economic profit when its revenue exceeds the total cost of its inputs. In the assumption of perfect competitve market, Any typical firm will set production where marginal revenue equals marginal cost., and price will achieve profit maximisation by setting output where marginal cost equals price. The profit maximising firm in perfect competition will produce where P=MC

It is important to realise that firms adjust differently in the short and long term. For example, in the short term when price exceeds average cost of producing at the profit maximising level then a firm would make an economic profit (Supernormal). When P becomes equal to minimum average costs the firm breaks even and makes normal profit. Should P fall below minimum average costs, obviously the firm would now incur economic loss. Firms in the long run will either enter or exit from the market depending on whether profit or loss is made or they will change their size. In other words expand their scale of operation. Should economic losses occur then the firm would leave the market or adjust capital to mitigate the low returns and visa versa in profit making circumstances.

Thus, the $25 economic profit will other firms to enter.

Of course, if relaxing the perfect competition assumption, the picture will be more complex and conclusion will be different based on different conditions. Without other information, it is not suitable to further discuss.

in perfect competition environment, the profit should be zero.

If firm A is having profit of $25 in an industry, this will attact others firms to enter the industry.

Other firms would also want to share this $25 profit. Let's say firm B enters the industry. Now, there are 2 firms in this indusrty we assume these two firms are exactly identical (same size, same output, same production cost) except their names. Firm A is now earning $12.5 and Firm B is also earning $12.5.

As a result, more firms will be attacted into the industry until the profit shift to zero.