Final answer:
The optimal contract length is where the marginal benefit still exceeds the marginal cost but is approaching it, which in this case, (D) exceeds $50 but is less than $100.
Step-by-step explanation:
When considering optimal contract length, the key economic principles involved are marginal benefit (MB) and marginal cost (MC). An optimal decision in economics is typically made where MB equals MC, because this is the point at which the last unit provides as much benefit as it costs to produce, resulting in the most efficient allocation of resources. Given the scenario where the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $50, the optimal contract length would be where the marginal benefit equals the marginal cost.
If the marginal cost remains constant at $50 while the marginal benefit is at $100, continuing to increase the length of the contract will yield additional benefits to society until the marginal benefit being derived from each additional unit of length declines to the point where MB = MC.
Therefore, based on this information, the correct answer is D) ...exceeds $50 but is less than $100. The optimal length is where MB still exceeds MC but is approaching it, maximizing overall benefit.