Econ+140++examples+for+chapter+6

Econ+140++examples+for+Chapter+6
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Examples for Chapter 6 1. Suppose there are significant specialized investments required for exchange, and furthermore, significant gains to specialization. It is relatively easy to specify likely future events. What method of procuring inputs would you use, and why? 2. Suppose the marginal benefit of writing a contract is $50, independent of length. Find the optimal contract length when the marginal cost of writing a contract length is: a. MC(L) = 10 + 2L b. MC(L) = 5 + 2L c. What happens to the optimal contract length when the marginal cost of a contract declines? 3. Explain why, as an individual shareholder, the structure of management’s
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