A real estate agent is considering changing her cell phone plan. There are three

Question

A real estate agent is considering changing her cell phone plan. There are three plans (A, B, and C) to choose from. Plans A and B involve a monthly fixed charge of $25. Plan A has a cost of $0.50 a minute for daytime calls and $0.20 a minute for evening calls. Plan B has a charge of $0.65 a minute for daytime calls and $0.15 per minute for evening calls. Plan C has a flat rate of $100 with 120 minutes of calls allowed per month and a charge of $0.30 per minute beyond that, day or evening.

16.        Refer to the day-calls cost lines graph above for the three plans. Write the total cost equation for computing the monthly charge for Plan A __________________

17.        Refer to the day-calls cost lines graph above for the three plans. What is the slope of Plan C equal to after 120 minutes?

$0.50

$0.30

$0.65

$0.15

None of the above

18.        If the agent will use the service for daytime calls only, is there any plan that is never optimal?

No – each plan will be optimal at some level of usage

Yes – Plan A is never optimal

Yes – Plan B is never optimal

Yes – Plan C is never optimal

19.        If the agent will be making day calls mostly and is expecting an average usage of 250 minutes per month, which plan should (s)he get?

Plan A

Plan B

Plan C

All plans are best over some levels of day calls (minutes).

20.        Compute the monthly cost for Plan B if the agent makes the following calls in a given month: 100 evening minutes, 100 day minutes _______________

21.        Compute the monthly cost for Plan C if the agent makes the following calls in a given month: 100 evening minutes, 100 day minutes _______________

$600.00 $500.00 Plan A Plan B -Plan C $400.00 $300.00 $200.00 $100.00 $0.00 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700

Explanation / Answer

Hi- Only four sub-parts can be answered per post, so please post separately in order to help us answer them. Thanks!

Providing answers to first four sub-parts:

16.

For A,

Charges for A = Fixed Charge + Rate/Min * Const.

A = 25 + 0.50*X, where, X=number of minutes

17.

Similarly for C,

Charges = 100 if < 120 minutes

               = 0.3*X > 120 minutes

So, slope is 0.3

18.

All the plans are optimal at some level of usage. The money spent depends on the usage pattern of the user

19.

The person should choose plan C as he will be getting charged a fix Rs. 100 and then only 0.3 per minute. From graph also, C has the cheapest cost

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