Question

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

Answer 1

$\huge{Monopolistic\ competition }$

$\textit{Monopolistic competition refers to a market situation in which thereare \\a large number of firms, selling closely related but different products. }$

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$\texttt{Freedom of Entry and Exit}$

Freedom of entry and exit is a feature of monopolistic competition which means that firms(sellers) are free to enter into or exit the industry as per their will i. e. when ever they want.

It makes sure that there must not be any kind of abnormal profits or unfair losses to the firm in a long run.

The entry into a monopolistic competition is free but its not easy. In order to inter into an industry, a firm has to undergo many steps and actions to get its firm registered and settled in the competition.

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Hope it helps
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