Answer: The correct answer is (d) 89,200 games.
To find the number of games that must be sold, we need to set up an equation to represent the total revenue from the game sales and solve for the number of games sold.
The total revenue from the game sales is equal to the number of games sold multiplied by the price per game, minus the cost of research and development.
Let X be the number of games sold
Total revenue = X * $2 - $160,000
We also know that the total cost of producing the games is equal to the number of games produced multiplied by the cost per game.
Total cost = X * $0.20
We can set the total revenue equal to the total cost and solve for X:
X * $2 - $160,000 = X * $0.20
X = 89,195
Since we gave away the first 275 games for free, we need to add 275 to the number of games sold to find the total number of games that must be sold.
Total number of games sold = X + 275 = 89,195 + 275 = 89,470
Therefore, the correct answer is (d) 89,200 games.