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.

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.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.

Quizplus · Accepted Answer

The difference in outcome is due to the fact that the four different owners see the pool as a common property and may not have the same incentive to maximize their profits. On the other hand, a single owner would see it as purely private property and would have the sole incentive to maximize profits. Therefore, the distribution of the pool among four owners would lead to a different outcome compared to a single owner.

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