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.
If both firms spend $2.5 million on lobbying,the expected profit of the contract is

Question

Quizplus · Accepted Answer

If both firms spend $2.5 million on lobbying, their total lobbying expenses will equal the economic profit of $5 million, resulting in zero expected profit for either firm.

The City of Dustin Is Going to Grant an Exclusive