Answer:
The indifference point is 50 minutes.
Step-by-step explanation:
Giving the following information:
A has a fixed cost of $10 and a variable cost of $0.05 per minute $0.10 per MB. Plan B has no fixed cost and a variable cost of $0.25 per minute $0.20 per MB.
First, we need to formulate the cost equation for each of the plans.
Plan A:
Total cost= 10 + 0.05*x
Plan B:
Total cost= 0.25*x
X= minutes
To determine the indifference point, we need to equal both formulas:
10 + 0.05x= 0.25x
10/0.20= x
50=x
The indifference point is 50 minutes.