Suppose that the market demand is given by q^d = 6500-100p and the market supply is given by q^s = 1200p.
a. Solve for the market equilibrium price and quantity.
b. Solve for the consumer and producer surplus.
c. Suppose you also knew a firm's cost function to be C(q) = 722 +1/200q^2. Is the firm earning a positive of negative profit? If all firms are identical to this firm, should you expect entry of exit from this market in the long run? Why or why not?