Every year, American television introduces many new shows, only about one-third of which survive past their first season.2 The few shows that last, however, prove to be very profitable.

a. How does creative destruction explain why studios bother to make new shows if most of them will fail?

b. In 2000, CBS premiered Survivor, an immensely popular reality show about everyday people living on an island. How did CBS and other networks respond to this surprise hit? pg56

c. What happened over the next several years to profits from Survivor? You don’t need to check CBS’s financial statements to get the answer; use the elimination principle!