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Consider a perfectly competitive market where the market demand curve is p(q) = 1000 − q....

Consider a perfectly competitive market where the market demand curve is p(q) = 1000 − q. Suppose there are 100 firms in the market each with a cost function c(q) = q2 + 1.

(a) Determine the short-run equilibrium. (b) Is each firm making a positive profit?

(c) Explain what will happen in the transition into the long-run equilibrium.

(d) Determine the long-run equilibrium.

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