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Chapter 10: Problem 6

In a forbes.com column, Patrick Rishe, an economist at Washington University, noted that in recent years, the National Football League has significantly expanded the number of games it broadcasts. As a result, he argued: "The NFL has oversaturated the market with its product.... TV ratings, consequently, have fallen. At least in part, diminishing marginal utility is a likely explanation as to why." Briefly explain his reasoning.

Short Answer

Expert verified
Patrick Rishe suggests that the NFL, by broadcasting more games, may have triggered 'diminishing marginal utility' amongst viewers. This means that as viewers watch more games, they derive less satisfaction from each additional game. The result could be a decrease in viewership reflected in falling TV ratings.

Step by step solution

01

Understanding Marginal Utility

Marginal utility is an economic concept that explains the value a consumer gets from consuming one additional unit of a good or service. It states that for each additional unit consumed, the level of satisfaction (utility) gained tends to decrease.
02

Applying to the NFL

In this case, the NFL (the provider of a service - football games) is increasing the number of these services (games it broadcasts). According to the principle of diminishing marginal utility, as consumers (viewers) consume more of this service (watch more games), the satisfaction they receive from each additional game tends to decrease.
03

Correlating to TV Ratings

TV ratings generally measure the popularity and reach of a show, in this case, the NFL games. If viewers are deriving less satisfaction from watching more games (due to diminishing marginal utility), they might choose to watch fewer games or switch off entirely, leading to a fall in TV ratings.

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