Neco 2023 Commerce Question 46

An enterprise plans a newspaper advertising campaign. The base advertising budget is \(\text{₦}200{,}000\) which is expected to generate \(2{,}000\) units sold at a selling price of \(\text{₦}1{,}200\) per unit. For each additional \(\text{₦}10{,}000\) spent on advertising, the selling price can be reduced by \(\text{₦}5\) while the quantity sold increases by \(200\) units. The cost price per unit is \(\text{₦}800\). The firm must keep the selling price not less than \(\text{₦}700\) and not exceed \(\text{₦}1{,}500\). It also wants to achieve a profit margin of at least \(30\%\) on total revenue (profit ÷ revenue). Determine the smallest additional advertising amount (in multiples of \(\text{₦}10{,}000\)) and the corresponding selling price that meet the margin requirement.