A popular cellular telephone provider offers its customers the following pay-as-you-go data plan: The first 4 gigabytes of data cost $10 each; each gigabyte of data after that costs $20.
a. Suppose the typical data customer has $100 to spend on either phone use or chocolate bars, which cost $1 each. Graph the typical customer's budget constraint.
b. Add an ordinary-looking (downward-sloping, convex to the origin) set of indifference curves to the graph, to represent the preferences of the typical customer. How many gigs of data is the typical customer likely to use?
c. Does your answer to (b) depend critically on the steepness or flatness of the typical customer's indifference curves? Explain.