Suppose that you are selling computers and you can allocate your budget to eithe

Question

Suppose that you are selling computers and you can allocate your budget to either internet or television advertising. You want to maximize new sales generated, which is determined by the following function:  S(I,T) = ln ( ( 4I+1) (1+T)^2 )   where I is the number of dollar spend on internet and T is the number of dollars spent on T. Suppose you have just received an extra $1 to spend and you have to spend it all on I or all on T, how would you want to spend it if you currently have( Hint: calculate Marginal Sales generated from the additional $1 on each option)

a.) I=0 and T=0

b.) I=5 and T=0

c.) I=0 and T=5

d.) I=5 and T=5

Explanation / Answer

b)l=5 and t=0

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