If Tiger Toys faces a demand curve of P = 85 − 0.25Q and a MC = ATC = 20,then the output would be
A)65.0 units.
B)85.0 units.
C)130.0 units.
D)32.5 units.

Question

Quizplus · Accepted Answer

To find the output, we need to set MC = P and solve for Q:
MC = P
20 = 85 − 0.25Q
0.25Q = 65
Q = 260
However, we need to check if this output is profitable by comparing it to the ATC:
ATC = MC = 20
Thus, the output is profitable at this level of production. Therefore, the best choice is C, producing 130 units.

If Tiger Toys Faces a Demand Curve of P =