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Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince
Edition 8ISBN: 978-1259129858Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince
Edition 8ISBN: 978-1259129858 Exercise 21
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 + 4 L.
b. MC ( L ) = 40 + 5 L.
c. What happens to the optimal contract length when the marginal cost of writing a contract declines?
a. MC ( L ) = 30 + 4 L.
b. MC ( L ) = 40 + 5 L.
c. What happens to the optimal contract length when the marginal cost of writing a contract declines?
Explanation
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The optimal length of writing a contract...
Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince
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