Suppose the marginal benefit of writing a contract is $60, independent of its length. Find the optimal
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Question:
Suppose the marginal benefit of writing a contract is $60, independent of its length. Find the optimal contract length when the marginal cost of writing a contract of lengthLis:
Instruction:Enter your responses rounded to two decimal places.
a.MC(L) = 30 + 4L.
b.MC(L) = 20 + 2L.
c. What happens to the optimal contract length when the marginal cost of writing a contract declines?
(Click to select)
It stays the same.
It decreases.
It increases.
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