Suppose that the marginal cost of producing a public service is MC = 100 - 2q while the average total cost is ATC = 100 - (3/2)q.
a. If the optimal quantity of the public service is q = 20, compute the MC and the ATC at that quantity.
b. Compute the revenue that would be generated by charging a price equal to marginal cost.
c. Compute the total cost of providing q = 20 units of the public service.
d. Compute the deficit that results from marginal cost pricing.