Refer to the figure below. Suppose that the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $100. Based on this information, the optimal contract length should be: 
A. increased by two-thirds.
B. increased by half.
C. decreased.
D. held constant at the contract length where MB = 100 and MC = 100.
Answer: D
You might also like to view...
Suppose in Italy producers can make 10,000 dresses or 1,000 coats per day, while in Canada producers can make 14,000 similar dresses or 2,000 similar coats per day. Therefore
A) 1 dress costs 7 coats in Italy. B) 1 dress costs 10 coats in Italy. C) 1 coat costs 7 dresses in Canada. D) 1 coat costs 10 dresses in Canada.
The value of marginal product equals
A) total revenue divided by total product (output). B) marginal revenue divided by marginal product. C) total revenue multiplied by total product (output). D) good's market price multiplied by marginal product.
Explain the concept of the "idea gap" in development economics
What will be an ideal response?
Fiona can iron 5 shirts or cook 2 meals in an hour. Alicia can iron 6 shirts or cook 1 meal in an hour. Which of the following statements is true?
a. Fiona's marginal cost of ironing a shirt is greater than Alicia's. b. Alicia's marginal cost of ironing a shirt is greater than Fiona's. c. Alicia's marginal cost of cooking a meal is twice that of Fiona's. d. Fiona's marginal cost of cooking a meal is twice that of Alicia's.