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Marginal benefit of writing a contract increases

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Reference no: EM133128278

Suppose the marginal cost of writing a contract of length L is MC(L) = 10 + 4L. 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) = 120.

b. MB(L) = 160.

c. What happens to the optimal contract length when the marginal benefit of writing a contract increases?

Multiple choice

  • It decreases.
  • It stays the same.
  • It increases

Reference no: EM133128278

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