The City of Dustin Is Going to Grant an Exclusive

question 97

Multiple Choice

The city of Dustin is going to grant an exclusive contract to provide cable TV for the next year.The economic profit of the contract is thought to be $5 million.MegaCable and Acme are competing for the contract.The firm that spends the most on lobbying will be awarded the contract.
Suppose MegaCable spends $2,000,002 on lobbying while Acme spends $2,000,001.If both firms know what the other is spending,the expected profit to MegaCable is __________ and to Acme it is __________.

• 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:

Basic Model

A simplified representation of a system or process, used to analyze fundamental aspects without complex details.

Consumer Behavior

The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

Fairness

A concept that deals with equitable treatment and the distribution of resources in a just manner.

Anchoring

A cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered when making decisions.