Question: Suppose the marginal cost of writing a contract of length

Suppose the marginal cost of writing a contract of length L is MC(L) = 10 + 2L. Find the optimal contract length when the marginal benefit of writing a contract is:
a. MB(L) = 100.
b. MB(L) = 150.
c. What happens to the optimal contract length when the marginal benefit of writing a contract increases?




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  • CreatedNovember 15, 2011
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