Final answer:
The differential equation expressing the spread of a joke in an isolated town with 300 residents, where the spread is proportional to the number of people who know and do not know the joke, is dp/dt = b · p(t) · (300 - p(t)).
Step-by-step explanation:
The differential equation that best describes the situation where the rate of diffusion of a joke within an isolated town of 300 residents is proportional to the number of people who have heard it and to those who have not is dp/dt = b · p(t) · (300 - p(t)).
In this equation, p(t) is the number of people who have heard the joke by day t, dp/dt represents the rate of change of p(t) over time, and b represents the level of social interaction, which affects how quickly the joke spreads. The term (300 - p(t)) accounts for the number of people who have yet to hear the joke, which decreases as more people learn about it.