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.Given the marginal cost of drilling a well of $94 and the total number of wells each landowner will therefore drill,each well will
A) earn a profit of $2.
B) breakeven.
C) earn a loss of $57.
D) earn a profit of an indeterminate amount.
E) earn a loss of an indeterminate amount.

Question

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.Given the marginal cost of drilling a well of $94 and the total number of wells each landowner will therefore drill,each well will
A) earn a profit of $2. 
B) breakeven. 
C) earn a loss of $57. 
D) earn a profit of an indeterminate amount. 
E) earn a loss of an indeterminate amount.

Quizplus · Accepted Answer

The marginal cost of drilling a well is $94, and the total number of wells each landowner will therefore drill is 1. This means that each well will earn a loss of $57, since the total revenue from drilling a well is $37 and the marginal cost is $94.

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