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Honours Degree in Applied Mathematics and Computing from the University of Limerick
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| Topic | Questions |
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| Quadratic Equations | 10 |
| Simultaneous Equations | 4 |
This section of my website is currently under construction and my solutions for the other topics on the course will appear here shortly. Scanning and uploading the notes is a time-consuming process so please bear with me.
You are considering changing from a pay-as-you-go mobile phone text service to using a text bundle offer. Currently you pay 10c per text. The Text Bundle offer costs €5 to set up and 4c per text after that. At what volume of texts is it worthwhile signing up to the bundle offer? Illustrate with a graph as well as calculating the exact volume.
Solution with detailed notes
The number of texts where the pay-as-you-go service costs the same as the bundle service is known as the break-even point. It is easiest to first use a formula to work this out, and then use our data to produce a graph.
First lets identify our different costs and set up some variables to represent these costs. All figures are in €.
| The cost of signing up to the bundle service is called the fixed cost | cf = 5 |
| The cost of sending a text on the bundle service is called the variable cost per unit | cv = 0.04 |
| The cost of sending a text on the old pay-as-you-go service is called the price per unit | p = 0.1 |
| The number of texts where both services cost the same is called the break-even volume | V = ? |
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Answer: The
bundle service becomes worthwhile after a person sends their 84th text message.
Notice that
we didn't round 83.333 down to 83 like we usually would in a mathematics
problem. To explain why this is lets compare the pay-as-you-go service to the
bundle service at 2 different stages:
| Pay-as-you-go
|
Bundle | |
| Amount spent after 83rd text message | 83 x 0.1 = €8.30 | 5 + 83 x 0.04 = 5 + 3.32 = €8.32 |
| Amount
spent after 84th text message
|
84 x 0.1 = €8.40 | 5 + 84 x
0.04 = 5 + 3.36 = €8.36
|
Now lets illustrate the problem with a graph (we will explain how to draw the graph in a moment):

The fixed cost of the bundle is simply a horizontal line across the €5 mark. To get the point of intersection between the lines representing the total cost of the bundle and the total pay-as-you-go cost, i.e. the break-even point, we need a pair of coordinates. The x-co-ordinate is simply V which we calculated above, i.e. 83.333. The y-coordinate is the pay-as-you-go cost at this point, i.e. 83.333 x 0.1 = 8.3333. The graph clearly demonstrates how the pay-as-you-go option line is lower (i.e. cheaper) up to the break-even point and then the bundle becomes cheaper.
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