Chapter 10, Problem 10.22E

Identifying variable-, fixed-, and mixed-cost functions. The Sunrise Corporation operates car rental agencies at more than 20 airports. Customers can choose from one of three contracts for car rentals of one day or less:

• Contract 1: $45 for the day
• Contract 2: $25 for the day plus $0.30 per mile traveled
• Contract 3: $1.50 per mile traveled
• 1. 1. Plot separate graphs for each of the three contracts, with costs on the vertical axis and miles traveled on the horizontal axis.

  Required

1. 2. Express each contract as a linear cost function of the form y = a + bX.
2. 3. Identify each contract as a variable-, fixed-, or mixed-cost function.