Harsanyi Electric is willing to sponsor a CBC TV movie, paying CBC $7,5 million for the 28 minutes of advertising. Harsanyi wants CBC to guarantee ratings of 19 points. For each point that CBC fall short Harsanyi gets a rebate of $1 million. Fractional ratings would be prorated. If the ratings exceed 19 points no additional fee would be paid. If Warrington rejected Harsanyi' offer, then she could always get a fee of $5 million with no risk.

Assume it is impossible to predict competitor's program.

Question 9:

Warrington wants to put a TV movie in the best possible slot. The possibilities are:

• April, Sunday follow 8.5 average rating;
• March, Monday follow 13 average ratings;
• December, Sunday follow 8.5 average ratings.
• When should she schedule the TV movie?
• Question 10:
• Warrington needs to choose between a fictional movie with a star and a fact-based movie without a star. Which movie should she choose?
• Question 11:
• Suppose that Warrington has scheduled a fact-based movie without a star for a Monday time slot in March following a show that typically receives ratings of 13. Should Warrington accept Harsanyi Electric's offer or accept the fixed fee of $5 million?