Many television and radio stations broadcast O. J. Simpson€™s 1995 trial for murder. Viewership of other programs and sales sagged as viewers skipped program length product pitches to watch trial coverage on weekday mornings. Estimates of average infomercial sales declines due to the Simpson trial ranged from 10% to 60% across cities (Stuart Elliott, €œAdvertising: The €˜O. J. Factor€™ Takes a Toll on Producers of Infomercials,€ New York Times, March 24, 1995:C4).
a. Use a graph similar to Figure 12.8 to explain why.
b. Before the O. J. Simpson trial, when a firm spent $1,000 on commercial television time at 12:30 p.m. in Charlotte, North Carolina, its sales rose by $2,190. If the firm bought $1,000 of advertising time during the trial, was it advertising optimally? If not, should it have increased or decreased the amount it spent on advertising?

Figure 12.8

Transcribed Image Text:

MB A, Minutes of advetising time puchasedper day Margina banef, marginal cost, Sper unit