Suppose That Four Land Owners,A,B,C,and D,own Adjacent Lots

question 44

Multiple Choice

Suppose that four land owners,A,B,C,and D,own adjacent lots.Recently,a pool of oil was discovered that is under all four lots but does not extend beyond the four lots.Below is information on the relationship between number of oil wells,output per well and revenue per well.
-Refer to the information above.The difference between the outcome when the entire pool is spread out over four different owners versus a single owner is that the

• A) four different owners are simply greedy.
• B) single owner has no incentive to produce a lot.
• C) four different owners are not profit maximizers.
• D) four different owners see the pool as common property while the single owner sees it as purely private property.
• E) single owner is not a profit maximizer.

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Definitions:

Dividend Revenue

Income earned from owning shares of a company, paid out from the company's earnings.

Cash Dividend

A cash payment of earnings made by a company to its stockholders.

Equity Securities

Financial instruments representing ownership interest in a company, such as stocks.

Available-for-Sale Debt Securities

Financial assets acquired primarily for selling in the short term but may be held for a longer period, reported at fair market value on balance sheets.