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ABC Corporation is a monopolistic competitor. It has fixed costs of $5,000 and a constant marginal cost of $500 per unit of production. It faces a demand curve described by this equation:
P = 1,000 - 10Q.
I. Find ABC's equilibrium price and quantity.
II. Will it earn monopoly profits at this equilibrium?
III. What will happen to ABC's price, quantity, and monopoly profits in the long run?
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