MegaCable and Acme Are Competing for an Exclusive Contract to Provide

question 67

Multiple Choice

MegaCable and Acme are competing for an exclusive contract to provide the city of Dustin with cable television for the next year. The firm that wins the contract will earn an economic profit of $5 million. The contact will be awarded to the firm that spends the most on lobbying. If both firms spend the same amount on lobbying, then the winner will be determined by a coin flip, so each will have a 50 percent chance of winning.  
Suppose MegaCable spends $2,000,002 on lobbying, and Acme spends $2,000,001 on lobbying. In this case, MegaCable's economic profit net of its lobbying costs will be ________, and Acme's economic profit net of its lobbying costs will be ________.

• A)$5 million; 0
• B)$2,999,998; -$2,000,001
• C)$2.5 million; $2.5 million
• D)$499,998; -$2,000,001

---

Definitions:

Child Care

The care and supervision of a child or multiple children at a time, which can include educational, cultural, and recreational activities.

Instrumental Role

A role focused on achieving tasks and providing for the physical needs and goals of a family or group.

Homer Simpson

A fictional character from the animated television series "The Simpsons," known for his humorous ineptitude and simplistic approach to life.

Feminization of Poverty

The phenomenon where women are more likely than men to live in poverty, often due to wage gaps, single motherhood, and a lack of access to well-paid jobs.