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Consider a perfectly competitive market with demand Q=1,000-4P. The marginal cost for each firm in the...

Consider a perfectly competitive market with demand Q=1,000-4P. The marginal cost for each firm in the market is constant at MC=4.

  1. Determine the competitive equilibrium price and quantity. .
  2. Graph demand, supply, and the equilibrium found in part A).
  3. Determine consumer surplus, producer surplus, and total surplus.
  4. Is consumer surplus or producer surplus equal to zero? Why or why not?
  5. Is this question representative of a long or short-run perfectly competitive market? How do you know?
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