Problem 06-09 (algo) Suppose the marginal benefit of writing a contract is $50, Independent of its length. Find the optimal contract length when the marginal cost of writing a contract of length _ Is: Instruction: Enter your responses rounded to two decimal places. a. MC(L) = 25 + 4L. b. MCIL) = 45 + 2L. c. What happens to the optimal contract length when the marginal cost of writing a contract declines? [Click to selec vProblem 05-20 (algo) According to The Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan In an attempt to reverse declining global sales. Suppose that as part of the restructuring plan Mitsubishi conducts an analysis of how labor and capital are used In Its production process. Prior to restructuring Mitsubishi's marginal rate of technical substitution is 0.15 (in absolute value). To hire workers, suppose that Mitsubishi must pay the competitive hourly wage of #1,330. In the study of its production process and markets where capital is procured, suppose that Mitsubishi determines that its marginal productivity of capital is 0.5 small cars per hour at Its new targeted level of output and that capital is procured In a highly competitive market. The same study Indicates that the average selling price of Mitsubishi's smallest car is *950,000. Determine the rate at which Mitsubishi can rent capital and the marginal productivity of labor at its new targeted level of output. Instruction: Enter your response for marginal productivity of labor rounded to four decimal places. Rental rate of capital: * Marginal productivity of labor: To minimize costs Mitsubishi should hire capital and labor until the marginal rate of technical substitution reaches what proportion? Instruction: Enter your response rounded to four decimal places.Problem 05-22 (algo) In the aftermath of a hurricane, an entrepreneur took a one-month leave of absence (without pay) from her $7,000 per month job in order to operate a klosk that sold fresh drinking water. During the month she operated this venture the entrepreneur paid the government $3,500 In kiosk rent and purchased water from a local wholesaler at a price of $1.45 per gallon. If consumers were willing to pay $2.40 to purchase each gallon of fresh drinking water, how many units did she have to sell in order to turn an economic profit? Instruction: Enter your responses rounded up to the nearest gallon.Problem 05-25 As another matter with Analysts Incorporated, your team has carefully collected data on output and costs for a software servicing firm. The data are In the spreadsheet below. You've decided to model the firm's costs as a cubic cost function. Click here for the Excel Data File a. Use regression analysis to get estimates for the parameters of the firm's cubic cost function. Which of your estimates is statistically significant? All but the cubic term b. What are the fixed costs for this firm? Round to the nearest penny. C. What is the average total cost when Q = 140? Round to the nearest penny. d. What is the marginal cost when Q = 140? Round to the nearest penny.Problem 06-10 (algo) Suppose the marginal cost of writing a contract of length { Is MC(L) = 20 + 54. Find the optimal contract length when the marginal benefit of writing a contract Is: Instruction: Enter your responses rounded to two decimal places. a. MB(L) = 90. b. MB(L) = 140. c. What happens to the optimal contract length when the marginal benefit of writing a contract Increases? It Increases. It stays the same. O It decreases.Problem 06-27 (algo) Recently, the owner of a Trader Joe's franchise decided to change how she compensated her top manager. Last year, she paid him a fixed salary of $60,000 and her store made $135,000 in profits (not counting payment to her top manager). She suspected the store could do much better and feared the fixed salary was causing her top manager to shirk on the Job. Therefore, this year she decided to offer him a fixed salary of $30,000 plus 18% of the store's profits. Since the change, the store is performing much better, and she forecasts profits this year to be $275,000 (again, not counting the payment to her top manager). Assuming the change In compensation is the reason for the Increased profits, and that the forecast is accurate, how much more money will the owner make (net of payment to her top manager) because of this change? S Does the manager make more money under the new payment scheme? [ Click to selec vProblem 05-16 (algo) A Nike women's-only store In California offers women's running, training, and sportswear products and also contains an In-store fitness studio for group and personal fitness training sessions. The store consistently earns profits In excess of $504,000 per year and Is located on prime real estate In the center of town. The store owner pays $16,000 per month In rent for the building. A real estate agent approached the owner and Informed her that she could add $7,600 per month to her firm's profits by renting out the portion of her store that she uses as a fitness studio. While the prospect of acquiring this rental Income was enticing, the owner believed the use of that space as a fitness studio was an Important contributor to her store's profits. What is the opportunity cost of continuing to operate the fitness studio within the store