Question

A company offers two monthly plans. Plan A costs $ 25 plus an additional $0.10 for each minute of calls. Plan B costs $18 plus an additional $0.15 for each minute of calls.

Answer 1

The indifference point is 140 minutes.

Explanation:

Giving the following information:

Plan A costs $ 25 plus an additional $0.10 for each minute of calls.

Plan B costs $18 plus an additional $0.15 for each minute of calls.

First, we need to establish the total cost formula for each plan:

Plan A= 25 + 0.1*x

Plan B= 18 + 0.15*x

x= number of minutes

Now, to calculate the indifference point, we equal both formulas and isolate x:

25 + 0.1x = 18 + 0.15x

7 = 0.05x

140=x

The indifference point is 140 minutes.

Prove:

Plan A= 25 + 0.1*140= $39

Plan B= 18 + 0.15*140= $39