Hi Jaydip,
In short, it is not a fixed price contract because the amount to be paid will be based on the number of hours worked by the contractor. If he works 100 hours, then he'll be paid $2500. If he works 400 hours he'll be paid $10,000.
On the other hand, if he was contracted to be paid, for example, $7500 to deliver a particular piece of software regardless of the hours expended, that would be a fixed price agreement.
In the question, the contractor is to be paid based on the time he spends doing the work, thus making this a time & material contract, even though there may be no material costs involved.
I hope this helps!
Best of luck in your studies,
Tracy