In a monopolistically competitive industry,the freedom of entry and exit leads to

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The freedom of entry and exit in a monopolistically competitive industry will lead to firms entering and leaving the industry until there are zero profits in the long-run equilibrium. This is because if profits exist, new firms will enter thus increasing competition and reducing profits. Likewise, if there are losses, some firms will exit the industry which reduces competition and increases profits. Eventually, the industry will stabilize at a point where each firm has zero economic profit.

In a Monopolistically Competitive Industry,the Freedom of Entry and Exit