Identifying variable, fixed, and mixed cost functions. The Pacific Corporation operates car rental agencies at more than 20 airports. Customers can choose from one of three contracts for car rentals of one day or less:

@ Contract 1: $50 for the day

® Contract 2: $30 for the day plus $0.20 per kilometre traveled

® Contract 3: $1 per kilometre traveled REQUIRED 1. Plot separate graphs for each of the three contracts, with costs on the vertical axis and kilometres traveled on the horizontal axis.

2. Express each contract as a linear cost function of the form y = a + bX.

3. Identify each contract as a variable, fixed, or mixed cost function.

LO1