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Renting jet skis from Jerry's water sports costs $20.00 per hour plus a one-time fee of $8.00. Renting jet skis from Splash of fun costs $25.00 per hour with no one-time fee. The cost to rent a jet ski depends on the total number of hours,h, rented. How many hours must you rent a jet ski for the cost to be the same at jerry's water sports and at splash of fun?

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facundobuzzetti

Answer:

The indifference point is 1.6 hours.

Step-by-step explanation:

Giving the following information:

Jerry's water sports:

Variable cost= $20.00 per hour

Fixed cost= $8

Splash of fun:

Variable cost= $25.00 per hour.

First, we need to establish the system of equations:

Jerry= 8 + 20x

Splash= 25x

x= number of hours

Now, we need to equal both formulas and isolate x:

20x + 8 = 25x

8=5x

1.6= x

The indifference point is 1.6 hours.

Prove:

erry= 8 + 20*1.6= $40

Splash= 25*1.6= $40

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