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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