When cell phones were first introduced, bandwidth was limited, which led to economically interesting pricing structures. One by Spring offered 4,000 free minutes for $39.99 a month. The fine print revealed a catch. Only 350 of those minutes were anytime minutes; the remaining were restricted to evening and weekend usage. If you went over your allotted time, you were charged 35 cents per minute for any additional minutes.

a. What was your marginal cost? Graph it.

b.What would your average variable cost curve for peak time usage have looked like?

c.If you did not keep track of your usage, how would you figure your marginal cost?

d.Why did firms offer such confusing plans?

e.Were firms that charged this way in favor of or against portability of phone numbers?

f.Why are these offers no longer prevalent?