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Find the optimal contract length

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Reference no: EM132579453

Question 1: 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.

c. What happens to the optimal contract length when the marginal cost of writing a contract declines?

Reference no: EM132579453

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