Homework 3 (solutions)

Homework 3 (solutions) - Homework 3(solutions 1 Make an...

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Homework 3 (solutions) 1. Make an argument as to which sport is the most popular (or as an economist might say, has the greatest demand) and provide evidence and reasoning for your argument. It can be argued that NFL is the most popular sports league. In multiple surveys, respondents (both male and female) say that football is their favorite sports. Advertising dollars are significantly higher for football games and football games have significantly higher television ratings than the other sports. 2. How did the 2004-05 NHL Lockout affect the demand to watch the NHL on television? The demand dropped dramatically, as evidence by the reduced television deal that was signed after the lockout. Television networks earn revenue through the sales of advertising slots. Thus a higher viewership increases their revenue. As the demand decreases, the value of ad slots decrease, then the media rights will also decrease. 3. Why are companies willing to spend millions of dollars on a 30 second advertising slot during the Super Bowl? Due to the incredible high viewership and media attention that are given to Super Bowl Ads, it can be justified that marginal benefit and marginal cost are equated. 4. Would the outcome of the Super Bowl affect the price that the television network can charge for an advertising slot? No, advertising slots are determined prior to the outcome of the game.
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This note was uploaded on 02/19/2012 for the course ECON 3306 taught by Professor Staff during the Spring '08 term at UT Arlington.

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Homework 3 (solutions) - Homework 3(solutions 1 Make an...

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