Think about the idiomatic expression in the following excerpt from "The Notorious Jumping Frog of Calaveras County." “[Smiley’s dog] would grab that other dog … and hang on till they throw up the sponge.…” What does the expression “thrown up the sponge” most likely indicate about the people watching the dog fight?

Admit that they lost the bet

Explanation:

The options you were given are the following:

An idiom is a phrase that has a figurative, non-literal meaning. We can't conclude what this type of phrase means based on the meanings of individual words that make it up. Here, we have the idiom throw up the sponge. No one is literally throwing up sponges. This phrase means to give up a contest or to acknowledge defeat.

Based on this information, we can conclude that the dogs are fighting until the people who own them admit that they lost the bet.

it was surely an odd creature that one made up by reading the historians first and the poets afterwards a worm winged like an eagle; the spirit of life and elegance and charm,   in a kitchen chopping up suet. but these creatures, monst'r however entertaining to the imagination, hast no existence in fact. what one might doth to bringeth h'r to life wast to bethink poetically and prosaically at one and the same moment,   thus keeping in toucheth with fact—that the lady is mrs martin, ag'd thirty-six, did dress in blue, wearing a black coxcomb and brown shoeth; but not losing sight of fiction eith'r—that the lady is a vessel in which all s'rts of spirits and f'rces art coursing and flashing p'rpetually. the moment, howev'r, yond one tries this method with the elizabethan mistress, one brancheth of illumination fails; one is did hold up by the scarcity of facts.   one knoweth nothing detailed, nothing p'rfectly true and substantial about h'r.   hist'ry scarcely mentions h'r.   and i did turn to professeth'r trevelyan again to seeth what hist'ry meanteth to that gent.   i hath found by looking at his chapt'r headings yond t meanteth.