Question
Consider the following two cellphone billing plans. 1. You are charged a monthly fee of $20, which includes thirty free minutes. Beyond this you
Consider the following two cellphone billing plans. 1. You are charged a monthly fee of $20, which includes thirty free minutes. Beyond this you pay $0.50 for each extra minute. 2. You are charged a monthly fee of $15, which has no free minutes. You pay $1 for each minute you use. Suppose that the number of minutes you use every month is a geometric random variable X with mean 1/p. What is the expected monthly cost of each of the two plans?
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