The same total output could have been produced by fewer firms at a lower cost. Output will be less and price will be higher than if the same industry were operating in perfect competition. In long-run equilibrium, the average cost will be higher for monopolistically competitive firms than it would be for perfectly competitive firms producing the same output. I b. price D and quantity E c. price A and quantity F d. price G and quantity H e. price E and quantity D 7. Agreement among firms in an industry to set a certain price or to share a market is called a. coordination.
Cartels a. occur in oligopolistic industries.
In an oligopoly with a dominant firm, a. price is set by the dominant firm at its profit-maximizing level, and firms on the competitive fringe accept this price as the market price. The kinked demand curve is a possible explanation of a. flexible prices in oligopoly. Profits can persist a. under all market structures.