Gibbon's Restaurant finds that it sells more pizzas when it advertises according to S = 20 + 4A - 0.5A²,where S is sales and A is advertising expenditure.The sales-maximizing level of advertising is: A) A = $2. B) A = $4. C) A = $6. D) A = $8. E) A = $12.

Question

Quizplus · Accepted Answer

To find the sales-maximizing level of advertising, we need to take the derivative of the sales function with respect to advertising expenditure (A) and set it equal to zero. The sales function is S = 20 + 4A - 0.5A^2. Taking the derivative with respect to A gives dS/dA = 4 - A. Setting this equal to zero gives 4 - A = 0, which implies A = $4.

Gibbon's Restaurant Finds That It Sells More Pizzas When It