Charlie's chicken farm has an advertising budget of $10,000.Charlie can buy adds in local newspaper for $100 for each add, or Charlie can make 30-second TV ads for $2000 each.Each local newspaper ad will be read by 100 local town folk, and each TV ad will be seen by 3000 city slickers in the neighboring cities.In Charlie's world the local town folk do not watch TV and the city slickers to not read local newspapers, and each person will only be exposed to one advertisement for Charlie's chicken.

Draw Charlie's budget constraint for the two types of adds he can purchase.

Draw Charlie's "budget" constraint for the two types of consumers he can reach.

Assuming that city slickers who see a TV add will eat the same amount of Charlie's chicken as a local town folk who reads his newspaper add, what would be the best way for Charlie to spend his advertising budget?What if Charlie knows that each local town folk reached by an ad will eat twice as much Charlie chicken as a city slicker?