Answered: Pizza Hut $1 mill $1 mill $70 / $125…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4). The following is a payoff matrix showing profit in millions of dollars when two companies simultaneously decide on various advertising budgets ($1 million, $2 million, or $3 million): a. In the first round of strategy elimination (when all three possible budgets are under consideration), which ad budget would the companies exclude? b. After the first round of elimination (previous question), would either company make a second-round elimination? c. What would be the likely outcome of this simultaneous advertising decision (i.e. what ad budget would each company end up choosing)?

Pizza Hut
$1 mill
$1 mill $70 / $125
Papa Johns$2 mill 85 / 120
$3 mill 80 / 100
$2 mill
65 / 130
$3 mill
55 / 120
65 / 105
60 / 90
70 / 110
75 / 95

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