Please answer # 5 only. The profits of the four major networks (CBS, NBC, ABC and Fox) depend significantly on the ratings of its prime time shows. The higher the ratings, the higher the price the network can charge for advertising and the higher the profits of the network. To keep things simple, we will focus on two networks, CBS and NBC, and two of the prime time spots, 8-9PM and 9-10PM. Each network needs to decide which time slot to place its hit show, 8-9PM or 9-10PM. The other time slot will be filled by a run of the mill show. The following payoff matrix shows the total number of viewers (in millions) if each network places its hit show in each of the time slots: CBS 8-9PM time slot 9-10PM time slot NBC 8-9PM time slot 100, 110 85, 120 9-10PM time slot 120, 40 70, 90 If you are the program manager for CBS, what time slot would you place your hit TV show (assuming that your goal is to maximize the number of viewers)? Please explain why. If you are the program manager for NBC, what time slot would you place your hit TV show (assuming that your goal is to maximize the number of viewers)? Please explain why. What is the outcome of the game? Explain Using the payoff matrix above, is there an incentive for NBC and CBS to talk to one another (before making their decision on time slots and agree to put their hit shows in different time slots than your answers to 1) and 2)? Explain your answer. Now suppose the payoff matrix for NBC in the 9-10PM time slot was changed from 85 to 50, as shown below: CBS 8-9PM time slot 9-10PM time slot NBC 8-9PM time slot 100, 110 50, 120 9-10PM time slot 120, 40 70, 90 Would your answer to 1), 2), 3) and 4) above change? Please explain your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please answer # 5 only.

The profits of the four major networks (CBS, NBC, ABC and Fox) depend significantly on the ratings of its prime time shows. The higher the ratings, the higher the price the network can charge for advertising and the higher the profits of the network. To keep things simple, we will focus on two networks, CBS and NBC, and two of the prime time spots, 8-9PM and 9-10PM.

Each network needs to decide which time slot to place its hit show, 8-9PM or 9-10PM. The other time slot will be filled by a run of the mill show.

The following payoff matrix shows the total number of viewers (in millions) if each network places its hit show in each of the time slots:

		CBS
		8-9PM time slot	9-10PM time slot
NBC	8-9PM time slot	100, 110	85, 120
	9-10PM time slot	120, 40	70, 90

If you are the program manager for CBS, what time slot would you place your hit TV show (assuming that your goal is to maximize the number of viewers)? Please explain why.
If you are the program manager for NBC, what time slot would you place your hit TV show (assuming that your goal is to maximize the number of viewers)? Please explain why.
What is the outcome of the game? Explain
Using the payoff matrix above, is there an incentive for NBC and CBS to talk to one another (before making their decision on time slots and agree to put their hit shows in different time slots than your answers to 1) and 2)? Explain your answer.
Now suppose the payoff matrix for NBC in the 9-10PM time slot was changed from 85 to 50, as shown below:

CBS

8-9PM time slot

9-10PM time slot

NBC

8-9PM time slot

100, 110

50, 120

9-10PM time slot

120, 40

70, 90

Would your answer to 1), 2), 3) and 4) above change? Please explain your answer.

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