Jiffy-Pol Consultants is paid $1,000,000 for each percentage of the vote that Senator Sleaze receives in the upcoming election.Sleaze's share of the vote is determined by the number of slanderous campaign ads run by Jiffy-Pol according to the function S = 100N/(N + 1), where N is the number of ads.If each ad costs $3,600 approximately how many ads should Jiffy-pol buy in order to maximize its profits?
A)3,329
B)72
C)1,666
D)1,702
E)833

Question

Quizplus · Accepted Answer

To maximize profits, Jiffy-Pol should buy ads such that the marginal cost equals the marginal revenue. The derivative of S with respect to N is set equal to the cost per ad divided by the revenue per percentage point. Solving this gives approximately 1,666 ads.

Jiffy-Pol Consultants Is Paid $1,000,000 for Each Percentage of the Vote