Chapter 5, Problem 6P

A real estate agent is considering changing her cell phone plan. There are three plans to choose from, all of which involve a monthly service charge of $20. Plan A has a cost of $.45 a minute for daytime calls and $.20 a minute for evening calls. Plan B has a charge of $.55 a minute for daytime calls and $.15 a minute for evening calls. Plan C has a flat rate of $80 with 200 minutes of calls allowed per month and a charge of $.40 per minute beyond that, day or evening.

a. Determine that total charge under each plan for this case: 120 minutes of day calls and 40 minutes of evening calls in a month.

b. Prepare a graph that shows total monthly cost for each plan versus daytime call minutes.

c. If the agent will use the service for daytime calls, over what range of call minutes will each plan be optimal?

d. Suppose that the agent expects both daytime and evening calls. At what point (i.e., percentage of call minutes for daytime calls) would she be indifferent between plans A and B?