Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 6, Problem 10CACQ
a
To determine
Optimal contract length when
b)
To determine
Optimal contract length when
b)
To determine
Optimal contract length when MB increases.
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Suppose the marginal cost of writing a contract of length L is MC(L) = 20 + 5L. Find the optimal contract length when the marginal benefit of writing a contract is:
a. MB(L) = 120.
b. MB(L) = 180.
c. What happens to the optimal contract length when the marginal benefit of writing a contract increases?
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 $120 and the marginal cost of that contract is $150. Based on this information, the optimal contract length should be
a. held constant at the contract length where MB = 120 and MC = 150.
b. decreased
c. increased by two-thirds.
d. increased by half.
Chapter 6 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 6 - Prob. 1CACQCh. 6 - Prob. 2CACQCh. 6 - Prob. 3CACQCh. 6 - Prob. 4CACQCh. 6 - Prob. 5CACQCh. 6 - Prob. 6CACQCh. 6 - Prob. 7CACQCh. 6 - Prob. 8CACQCh. 6 - Prob. 9CACQCh. 6 - Prob. 10CACQ
Ch. 6 - Prob. 11PAACh. 6 - DonutVille caters to its retirement population by...Ch. 6 - Prob. 13PAACh. 6 - Prob. 14PAACh. 6 - Prob. 15PAACh. 6 - Prob. 16PAACh. 6 - Prob. 17PAACh. 6 - Prob. 18PAACh. 6 - Prob. 19PAACh. 6 - Prob. 20PAACh. 6 - Prob. 21PAACh. 6 - Prob. 22PAACh. 6 - Prob. 23PAACh. 6 - Prob. 24PAACh. 6 - Prob. 25PAACh. 6 - Prob. 26PAACh. 6 - Prob. 27PAA
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