A small midwest town has two burger restaurants located across the street from each other: 'Burgerama' and 'The Burger Brothers'. As both restaurants compete for the same customers, they are both considering offering a larger burger with more toppings to lure additional customers to their respective restaurant. This larger burger would still be sold at current price $11.50 per burger meal, but the total cost per meal would increase from $5.20 to $6.40. Assuming that the total quantity of burgers demanded at this price is 100 burgers per week, the customer base is divided equally between the two restaurants when the burgers are of equal size. Furthermore, 75% of all customers would eat at a restaurant that serves considerably larger burgers for the same price as the competitor.
a) Complete the payout matrix below with the total profit each restaurant would earn in the different scenarios based on this information:
Instruction: Enter your responses rounded to 2 decimal places.
b. Using the information above, we see that equilibrium out come will be for , which is the option for Burgerama and the option for The Burger Brothers.