Exercise 2.27 crane company recently opened for business. the owner wants a cost function estimate to with future planning. the manager feels that last month's results fairly represent costs over the coming six months. last month 700 pizzas were sold. from the following information, use account analysis to estimate the firm's cost function for pizzas sold wages for part-time pizza toppings pizza dough store rent depreciation on furniture and ovens napkins, paper plates, cups, and straws liability insurance advertising cleaning supplies managers' salary utilities (electricity and telephone) soft drink purchases $2,723 231 266 426 85 95 60 15 1,540 106 427 develop a cost function using the data from the accounting records. (round variable cost per unit to 2 decimal places, e. g. 15.25.) cost function x number of pizzas link to text link to text use the cost function to estimate the total costs if 900 pizzas are expected to be sold next month total cost for 900 pizzas

For example, the upper right cell shows that if expresso advertises and beantown doesn't advertise, expresso will make a profit of $15 million, and beantown will make a profit of $2 million. assume this is a simultaneous game and that expresso and beantown are both profit-maximizing firms. if expresso decides to advertise, it will earn a profit of $ million if beantown advertises and a profit of $ million if beantown does not advertise. if expresso decides not to advertise, it will earn a profit of $ million if beantown advertises and a profit of $ million if beantown does not advertise. if beantown advertises, expresso makes a higher profit if it chooses . if beantown doesn't advertise, expresso makes a higher profit if it chooses . suppose that both firms start off not advertising. if the firms act independently, what strategies will they end up choosing? expresso will choose to advertise and beantown will choose not to advertise. expresso will choose not to advertise and beantown will choose to advertise. both firms will choose to advertise. both firms will choose not to advertise.