Question

Suppose the marginal cost of writing a contract of length L is MC (L) = 20 + 5L. Find the optimal contract length when the marginal benefit of writing a contract is:
a. MB (L) = 120.
b. MB (L) = 180.
c. What happens to the optimal contract length when the marginal benefit of writing a contract increases?



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  • CreatedApril 18, 2014
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