2. In a small town there are only 2 TV stations (no cable!). At a certain time,

Question

2. In a small town there are only 2 TV stations (no cable!). At a certain time, each has the choice of broadcasting Sports or Ballet, 70% of the market likes Sports and hates Ballet, while 30% of the market likes Ballet and hates Sports. Sports people won't watch Ballet, and Ballet people won't watch Sports. If both stations choose the same programming, the market is split between them. Assume that profits are equal to the viewing audience. Which program will the two stations choose? Is this socially efficient?

Explanation / Answer

According to given data 70 % of the market like sports and hates ballet, while 30 % of market ballet and hates sports. Both stations would attempt to maximize profit by playing program which is liked most by the people. Thus, only 70 % people program would be shown only while 30 % people would remain uncatered. Hence, this system is not socially efficient. It would be socially efficient if both stations show different programs.

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