Answer:
The point of indifference is both plans have a variable cost and the point of difference is plan A has a fixed and variable cost both.
The point of indifference between the two plans is "40 minutes & 20MB, but it's not unique."
This is because with 40 minutes, plan A would be $2, and at 20MB, it will be $2, plus a fixed cost of $10, making a total of $14.
This is evident in the fact that
At 40minutes × $0.05 => $2;
Also, at 20 MB × $0.10 per MB => $2;
Add the Fixed cost of $10
We have a total => $14.
On the other hand, plan B also has a combined total of $14 at 40 Minutes and 20 MB.
This is evident in the fact that
At 40minutes × $0.25 (variable cost,)=> $10;
Also, at 20 MB × $0.20 per MB => $4
The total cost is $14.
Not that the point of indifference is the point at which the amount of total costs, and profits, are exact using different cost systems.
Hence, in this case, it is concluded that the correct answer is "40 minutes & 20MB, but not unique."
The available options are the following:
(A)40 minutes & 20MB and its unique
(B)20 minutes & 40MB and unique
(C)20 minutes & 40MB, but it's not unique
(D)40 minutes & 20MB, but it's not unique
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