The following cell-phone offer by Sprint is typical of what one can get on a cell phone plan: 4,000 free minutes for $39.99 a month. The fine print says that only 350 of those minutes are anytime minutes; the remaining are restricted to evening and weekend usage. If you go over your allotted time, you are charged 35 cents per minute for any additional minutes.
a. What is your marginal cost? Graph it.
b. What would your average variable cost curve for peak time usage look like?
c. If you do not keep track of your usage, how would you figure your marginal cost?
d. Why do firms offer such confusing plans?
e. Were firms that charged this way in favor of or against portability of phone numbers?