At its current level of production, a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm’s marginal-cost curve crosses the marginal-revenue curve at an output level of 1000 units. What is the firm’s current profit? What is likely to occur in this market, and why?

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