Problem 06-09 (algo) Suppose the marginal benefit of writing a contract is $80, independent of its length. Find the optimal contract length when the marginal cost of writing a contract of length L is: Instruction: Enter your responses rounded to two decimal places. a. MC(L) = 50 + 5L. b. MC(L) = 30 + 3L. c. What happens to the optimal contract length when the marginal cost of writing a contract declines? It increases. Check my work
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- Suppose the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $150. Based on this information, the optimal contract length should be:X was so in love with M. To show his true love, he insisted that M take his Toyota Fortuner worth P2Million. M was embarrassed but she is in need of a car. In order not to be entirely indebted to X, M agreed that she will pay X P10,000.00 for the car. Is the contract of sale valid? A. Yes. The gross inadequacy of the price does not render the contract invalid. B. Yes. The property is properly located and identified. C. No. X cannot sell a car for a very low price. It shows that he has no intention to really sell it. D. No. X must first obtain the permission from the Bureau of Internal Revenue if he can sell the car for a very low price.Decide whether that sentence is true or false? The validity of the contract completely depends on the form of contract. Contract for the benefit of a third party is a contract which is concluded by three parties and the third party shall enjoy benefits from the performance of such obligations; Time of entry into civil contract shall be the time when the offeree‘s letter of acceptance was posted In cases where a third party refuses to enjoy its benefits from a contract for the benefits of a third party, the contract shall still take effect toward the contracting parties. When the individual entering into the contract dies, such contract shall terminate, unless otherwise agreed upon by parties. When the object of the contract does not longer exist, it does not lead to the termination of the contract, unless the object of the contract is a distinctive object. A pledge of property shall take effect as from the time at which the last party signs the document of pledge of…
- Susan hires Joe to mow her grass every week for eight weeks. They agree on a price. Which kind of contract is this? Implied O ExpressSuppose that Honda is on the verge of signing a 15-year contract with TRW to supply airbags. The terms of the contract include providing Honda with 85 percent of the airbags used in new automobiles. Just prior to signing the contract, a manager reads that one of TRW’s competitors has introduced a comparable airbag using a new technology that reduces the cost by 30 percent. How would this information affect Honda’s optimal contract length with TRW?Suppose a new contracting environment that requires clearing fewer legal hurdles is considered. This new contract will result in A) a decrease in the marginal cost and a shorter optimal contract. B) a decrease in the marginal cost and a longer optimal contract. C) an increase in the marginal cost and a shorter optimal contract. D) an increase in the marginal cost and a longer optimal contract.
- Kyle's Fabric Inc. agreed to supply 50 bolts of fabric to Fabric Stores Ltd. for a price of $50 per bolt. Shortly after the contract came into effect, the market price of this fabric rose to $75 per bolt so Kyle's Fabric Inc asked for more money. Fortunately, Fabric Stores Ltd. was agreeable to paying the new higher price. Why might Fabric Stores Ltd's promise to pay an additional $25 per bolt be unenforceable? 1) the inadequate consideration given to Kyle's Fabric Inc. for the promise to pay the price increase 2) the absence of consideration or a seal for the promise to pay the price increase 3) the inadequate consideration given to Fabric Stores Ltd. for the promise to pay the price increase 4) the absence of consensus1) an American family is buying British wool in the local retail store. Which month will those products be cheaper for the family? Explain your answer using the numbers from the chart. Show your math. 2) a French company contracts a Chinese architect to design a new building in lyon for 800,000 Yuan. How much (in euros) would it cause the French firm in month 1 and 2? So in which month would the French company prefer to pay off the contract? Explain your answer using the numbers from the chart. Show your math. 3) u.s. holder of real estate and transportation are attracting investments from Chinese visitors using the Yuan. In which month should the Chinese investors buy us real estate and transportation? Explain your answer using the numbers from the chart and show your math.Q#3: XYZ construction are manufactures of slabs and are the major suppliers for orange train in Lahore. XYZ is manufacturing two types of slabs. The cost for these two types of slabs are $175 and $225, respectively. XYZ current production capacity is 200 slabs (both types). Because of the urgency of the need, government of the Punjab would pay the manufacture a bonus of $50,000 plus an additional $25 for each of the unit greater than 200. Determine the function which determine the sales of the number of slabs provided of each type by XYZ construction. What is the expected profit if XYZ is manufacturing 150 slabs of type 1, and 250 slabs of type IL
- In Chapter 5 of Managerial Economics, Froeb discusses post-investment holdup as a sunk cost problem associated with contract-specific fixed investments. The modern theory of contracts is sometimes called the theory of joining wills, which simply means when parties make an agreement they are joining together to complete an endeavor of mutual interest. The problem with all contracts that endure over time is that not all potential challenges can be anticipated. The idea of joining wills is that parties will attempt to seek accommodations to advance their mutual interest, so long as the return on the invested activity pays off. Froeb illustrates the idea by the example of marriage as a contract. Review the three scenarios below. Look for which, if any, of these scenarios presents an example of post-investment holdup. Your firm conducted a search for a new chief financial officer and hired a highly qualified candidate with a yearly salary of $250,000. After six months, the person left to…4 The median starting salary for new law school graduates is determined by log(salary) = Bo + B,LSAT + B,GPA + Bzlog(libvol) + Bąlog(cost) + Bsrank + u, where LSAT is the median LSAT score for the graduating class, GPA is the median college GPA for the class, libvol is the number of volumes in the law school library, cost is the annual cost of attending law school, and rank is a law school ranking (with rank = 1 being the best). Explain why we expect B5 < 0. (i) What signs do you expect for the other slope parameters? Justify your answers. (ii) (iii) Using the data in LAWSCH85, the estimated equation is log(salary) = 8.34 + .0047 LAST + .248 GPA + .095 log (libvol) + .038 log(cost) - .0033 rank n = 136, R² = .842. What is the predicted ceteris paribus difference in salary for schools with a median GPA differ- ent by one point? (Report your answer as a percentage.) (iv) Interpret the coefficient on the variable log(libvol). Would you say it is better to attend a higher ranked law…Recall a sharecropping agreement is where a farmer provides a percentage of their yield to a landowner in exchange for renting the land. Consider the graph below and answer the following questions (include calculations in work): 11 VMPL 10 8 a*VMPL 5 4 3 2 1 10 15 20 25 30 35 40 45 50 55 Labor (Hour) "andıno