Refer to the figure below. Suppose that the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $50. Based on this information, the optimal contract length should: 
Definitions:
Nominal Interest Rate
The interest rate before adjustments for inflation, representing the face value of borrowing costs or investment returns.
Relative Prices
The price of a good or service compared to the price of another, indicating the trade-off between choosing one over the other.
Demand for Loanable Funds
The desire for borrowing money that exists among individuals, businesses, and governments in an economy, usually influenced by interest rates.
Interest Rate
The cost, in terms of a percentage of the principal, levied by a lender on a borrower for asset usage.
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