Question

A phone company offers to monthly plans. Plan a cost $23 plus an additional $.08 for each minute of calls. Plan B cost $19 an additional $.12 for each minute of calls.

Answer 1

The indifference point is 100 minutes.

Explanation:

Giving the following information:

Plan a cost $23 plus an additional $.08 for each minute of calls.

Plan B cost $19 an additional $.12 for each minute of calls.

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

Plan A= 23 + 0.08*x

Plan B= 19 + 0.12*x

x= number of minutes

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

23 + 0.08x = 19 + 0.12x

4 = 0.04x

100= x

The indifference point is 100 minutes.

Prove:

Plan A= 23 + 0.08*100= $31

Plan B= 19 + 0.12*100= $31