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Explain the 'Free Entry and Exit of Firms' Feature of Monopolistic Competition. - Economics

Explain the 'free entry and exit of firms' feature of monopolistic competition.

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Solution

Free entry and exit of firms under monopolistic competition, firms are free to enter in or exit from the industry at any time according to their wish. This implies that there are neither abnormal profits nor any abnormal losses to a firm in the long run. But entry under monopolistic competition is not so easy and free as the situation prevails under perfect competition.

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