The equation for the composite sound wave is given by:
\[
y = A \cos(\omega t) \cdot \cos(\omega' t)
\]
Using the trigonometric identity for the product of cosines:
\[
\cos A \cos B = \frac{1}{2} \left( \cos(A - B) + \cos(A + B) \right)
\]
we can rewrite the equation as:
\[
y = \frac{A}{2} \left( \cos[(\omega - \omega') t] + \cos[(\omega + \omega') t] \right)
\]
The first term represents the beat frequency, which is the frequency of the oscillation of the amplitude. The frequency of the beats is given by:
\[
f_{\text{beat}} = \frac{\omega - \omega'}{2\pi}
\]
Thus, the observed beat frequency is \( \frac{\omega - \omega'}{2\pi} \).
Therefore, the correct answer is (1) \( \frac{\omega - \omega'}{2\pi} \).