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Taco Bell and Taco John's are two competing fast - food restaurant chains which serve Mexican inspired food at low prices. Many restaurants have holiday
Taco Bell and Taco John's are two competing fastfood restaurant chains which serve Mexican inspired food at low prices. Many restaurants have holiday inspired menu items such as the Nachos Navidad at Taco John's.
Suppose two restaurants similar to Taco Bell and Taco Johns are considering the addition of a holiday menu item. Restaurant is considering a holiday inspired burrito while Restaurant is considering a holiday inspired quesadilla. If neither company releases either product, Restaurant will earn their typical $ million in quarterly profits while Restaurant will earn $ million. If Restaurant decides to release their burrito, they will spend an additional $ million introducing the new product but gain $ million in additional revenue while Restaurant s revenue will be lower by $ million. If Restaurant decides to release their quesadilla, they will spend $ million introducing the new product but gain $ million in revenue while Restaurant s revenue will be lower by $ million. If both firms release a holiday product, they will each spend $ million but will only gain $ million in revenue each. All relevant values are gathered in the table below.
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