Neco 2017 Commerce Question 7

A firm plans to advertise using TV and radio. TV ads cost \(\text{₦}150\) per 1,000 viewers (CPM) and each TV ad reaches \(2{,}000{,}000\) viewers. Radio ads cost \(\text{₦}90\) per 1,000 listeners and each radio ad reaches \(800{,}000\) listeners. The firm needs a total reach of at least \(10{,}000{,}000\) people. The advertising elasticity of demand is \(0.25\) (a 1\% increase in advertising expenditure raises sales by \(0.25\%\)). Current monthly sales are \(\text{₦}4{,}500{,}000\) with a profit margin of \(20\%\). Determine the optimal whole numbers of TV and radio ads that meet the reach requirement at minimum cost, and then compute the expected increase in profit (in ₦) from the advertising campaign.