Find the optimal contract length

Assignment Help Econometrics

Reference no: EM13181989

Suppose the marginal benefit of writing a contract is $100, independent of its length. Find the optimal contract length when the marginal cost of writing a contract of length L is:

a. MC(L) = 30 + 4L.

b. MC(L) = 40 + 5L.

Reference no: EM13181989

Questions Cloud

What is the maximum that investor should pay for the bond : An investor wants to earn a yield of 9% from a 10,000 bond with a coupon rate of 6% payable semiannually. The bond's life is 10 years, and it was issued 4 years ago. The eighth payment will be made immediately after the purchase. What is the ma..

Find probability of a major earthquake in the coming year : Helen just bought a house for $250,000. Earthquake insurance, which would pay $250,000 in the event of a major earthquake, is available for $25,000. Helen estimates that the probability of a major earthquake in the coming year is 10 percent, and t..

Explain what is the expected percent transmittance : A soln was made by dissolving 5 g of sodium iodide in enough water to make 500mL of soln. What is the expected percent transmittance for this soln?

Explain the reaction reaches equilibrium : Ethylene is produced by the dehydrogenation of ethane. If the feed includes 0.5 mol of steam(an inert diluent) per mole of ethane and if the reaction reaches equilibrium

Find the optimal contract length : Suppose the marginal benefit of writing a contract is $100, independent of its length. Find the optimal contract length when the marginal cost of writing a contract of length L is: a. MC(L) = 30 + 4L. b. MC(L) = 40 + 5L.

Explain the activation energy for the reaction : The activation energy for the reaction is 48.1kj/mol. What is the half-life (in hr) in the winter (10.0 C)?

How is the investment function related to slope of the is : Assume the consumption function is given by C=200+0.5(Y-T) and the investment function is I=1000-200r, where r is in percent. G equals 300 and T equals 200. Find the equation for the IS curve (hint: use the formula for equilibrium Y = C + I + G and t..

Explain living carbon samples the campfire made : Recall "living" carbon samples show 15.3 d/min*g (carbon). note: CaCO3 is 12.00% carbon, and 14C has a half-life of 5730yr.

User Account

All Pages