Thank you !! The following is a payoff matrix showing profit in millions of doll

Question

Thank you !!

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): Blank for Formatting Pizza Hut Advertising Budget: $1 mill Pizza Hut Advertising Budget: $2 mill Pizza Hut Advertising Budget: $3 mill Papa John's Advertising Budget: $1 mill $30/20 $40/$25 $40/S15 Papa John's Advertising Budget: $2 mill 35/25 30/30 45/20 Papa John's Advertising Budget: $3 mill 20/40 25/35 30/25

Explanation / Answer

1.

In the first round

Papa john - (max payoff in case of different budgets)

$1 mn - 40

$2 mn - 45

$3 mn - 30

so $3 mn is eliminated

Pizza hut - (max payoff in case of different budgets)

$1 mn - 40

$2 mn - 35

$3 mn - 25

so option (B) is correct.

2.

so $3 mn is eliminated

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