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:

Net Income

Net income is the total profit a company generates after subtracting all its expenses, taxes, and losses from its total revenue.

Operating Activities

Activities that constitute the primary or main activities of an entity, including the production, sales, and delivery of the company’s product as well as collecting payment from its customers.

Sale Proceeds

Sale proceeds refer to the total amount received from the sale of goods or assets before any deductions are made.

Equipment

Fixed assets used in the operations of a business to generate income, not intended for sale.