The market structure of home video gaming systems is best characterized by monopolistic competition. Quasar Entertainment is one of the producers in this market. The cost function, the inverse demand for Quasar systems and the resulting marginal revenue curve is given below respectively.

Determine Quasar's profit maximizing level of output and the price charged to customers. What is the profit earned? Is this a long-run equilibrium and why?

C(Q)= 0.25Q^2 + 6,250

P= 500- 9.75Qd

MR(Qd)= 500-19.5Qd