Refer to the Figure Below

question 54

Multiple Choice

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 half.
• B) increased by two-thirds.
• C) decreased.
• D) held constant at the contract length where MB = 100 and MC = 100.

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