Business, 18.01.2021 14:00 3ittylilbiddy3

There are two pizza restaurants in College Town, PieCrust and LaPitra. Each company must decide whether to advertise or to not advertise. In the payoff matrix below, the first entry in each cell indicates PieCrust's daily profit, and the second entry indicates LaPizza's daily profit. Both firms have complete information. Advertise Not Advertise
Advertise
$250, $200 $450,$300
PieCrust
Not Advertise $180, $500 $390,5400

Required:
a. What strategy should PieCrust choose if LaPizza chooses to advertise? Explain using the dollar values in the payoff matrix.
b. What is the dominant strategy. If any, for LaPizza? Explain using the dollar values in the payoff matrix.
c. In the Nash equilibrium, determine each of the following

(1)PicCrust's daily profit
(2) LaPizza's daily profit

d. Suppose that advertising costs increase by $60 per day. Redraw the payoff matrix to reflect the effect of the higher advertising costs.

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There are two pizza restaurants in College Town, PieCrust and LaPitra. Each company must decide whet...

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