Question

Each month. a telephone service charges a base rate of $\$\text{1}0.00$ and an additional $\$0.0\text{8}$ per call for the first 40 calls and $\$0.0\text{4}$ for every call after that. How much does the telephone service charge for a month in which 50 calls are made?\[\]
A.$\$\text{12}.\text{2}0$\[\]
B. $\$\text{12}.\text{8}0$\[\]
C$.\$\text{13}.\text{6}0$\[\]
D$.\$\text{14}.\text{4}0$\[\]

Answer 1

Hint: We Know that the base rate is just for installation of phones not for calls. The payment for the first 40 calls will be 40 times the price per call and payment for the extra calls made is 10 times the price per extra call after 40 calls. Add the three payments to get the answer. \[\]

Complete step-by-step answer:
The base rate in service industry refers to the price customers have to pay excluding the consumption of service, for example the base rate in telephone service refers to the the payment excluding the pay for the calls, in television service the capacity charge without payment for the tv channels etc.\[\]
As given in the question the telephone service charges a base rate of $\$\text{1}0.00$ which is just to keep the telephone in the house which has nothing to do with the calls.\[\]
It is also given that the first 40 calls we have to pay $\$0.0\text{8}$ per call. So the payment we have to pay for the first 40 calls is 40 times $\$0.0\text{8}$ that is $40\times 0.08=3.20\$$.\[\]
It is given further that we have to pay $\$0.0\text{4}$ for every call after 40 calls. The total number of calls is 50. So we made $50-40=10$ extra calls. So we have to pay 10 times $\$0.0\text{4}$ that is $10\times 0.04=0.4\$$\[\]
So the total price we have to pay in the month is sum of payment of the base rate, the first 40 calls and the next 10 calls. $10+3.20+0.40=13.60$

So, the correct answer is “Option C”.

Note: The question is a trick question which may confuse you to multiply the base rate with 40. It is to be noted that the base rate in the service industry and statistics is different. Base rate in statistics is known as class probabilities unconditioned on featural evidence, frequently also known as prior probabilities.