P-TV and QRS-TV are planning their fall line-up.Suppose that sit-coms are more popular than reality shows,and so generate more advertising revenue than do reality shows,but they are more expensive to produce since real actors must be hired.In the following decision tree,QRS-TV announces its decision first and P-TV observes that choice before it decides whether to air a sit-com in the same time slot or a reality show.Both stations know all of the information shown in this diagram when they make their decisions.
Refer to the information above.Suppose QRS-TV enters into an agreement with P-TV that gives QRS-TV the exclusive right to air a reality show during this time slot.QRS-TV would have to pay P-TV _____ in order to persuade P-TV to enter into this agreement.

Question

P-TV and QRS-TV are planning their fall line-up.Suppose that sit-coms are more popular than reality shows,and so generate more advertising revenue than do reality shows,but they are more expensive to produce since real actors must be hired.In the following decision tree,QRS-TV announces its decision first and P-TV observes that choice before it decides whether to air a sit-com in the same time slot or a reality show.Both stations know all of the information shown in this diagram when they make their decisions. 
Refer to the information above.Suppose QRS-TV enters into an agreement with P-TV that gives QRS-TV the exclusive right to air a reality show during this time slot.QRS-TV would have to pay P-TV _____ in order to persuade P-TV to enter into this agreement.

Quizplus · Accepted Answer

If QRS airs a reality show,P-TV earns $10 million by also airing a reality show and $5 million airing a sitcom.By paying P-TV more than $5 million to air a sit-com,QRS changes the incentives by enough to convince P-TV to air a sit-com.

P-TV and QRS-TV Are Planning Their Fall Line-Up