Question

A real estate agent is considering changing her cell phone plan; there are three to chose from - all involve a monthly fee of $19.75

Plan A charges $0.53 per minute for daytime calls and $0.19 per minute for evening calls.

Plan B charges $0.56 per minute for daytime calls and $0.13 per minute for evening calls.

Plan C has a flat rate of $49 with up to 200 minutes of calls included per month and a charge of $0.30 per minute beyond that, day or evening.

If the agent will use the service for daytime calls only, how many minutes per month should she stay below so that Plan A is the least cost alternative?

Your Answer:

Answer 1

Since the Plan A charges($0.53 per minute) is cheaper than Plan B charges($0.56 per minute), and since the service is used for Daytime calls only, it is understood that Plan A is cheaper in comparison to Plan B.

Now, when comparing Plan A to Plan C, we can use the following equation for comparing Plan A to Plan C:-

Total number of day time calls = Flat rate under Plan C for 200 minutes/Day time rate for Plan A

Total number of day time calls = 49/$0.53 per minute

Total number of day time calls = 93.45 calls

At 93 calls(Rounded), the agent will find that Plan A is the least cost alternative based on the calculations above. Please let me know if you have any questions via comments and all the best :) !