Suppose that the marginal benefit of writing a contract is $125 and the marginal cost of that contract is $100. Based on this information, the optimal contract length should a. be decreased by half. b. be increased. c. be held constant at the contract length where MB = 125 and MC = 100. d. be decreased by two-thirds.

Suppose that the marginal benefit of writing a contract is $125 and the marginal cost of that contract is $100. Based on this information, the optimal contract length should a. be decreased by half. b. be increased. c. be held constant at the contract length where MB = 125 and MC = 100. d. be decreased by two-thirds.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter3: Benefits, Costs, And Decisions

Section: Chapter Questions

Problem 3.4IP

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