Scenario 17-2 Imagine that two oil companies, Big Petro Inc. and Gargantuan Gas, own adjacent oil fields. Under the fields is a common pool of oil worth $24 million. Drilling a well to recover oil costs $1 million per well. If each company drills one well, each will get half of the oil and earn a $11 million profit ($12 million in revenue minus $1 million in costs). Assume that having X percent of the total wells means that a company will collect X percent of the total revenue. Refer to Scenario 17-2. If Big Petro Inc. were to drill a second well and Gargantuan Gas also drilled a second well, what would Big Petro Inc.'s profit be? A. $10 million B. $7 million C. $9 million D. $8 million
Scenario 17-2 Imagine that two oil companies, Big Petro Inc. and Gargantuan Gas, own adjacent oil fields. Under the fields is a common pool of oil worth $24 million. Drilling a well to recover oil costs $1 million per well. If each company drills one well, each will get half of the oil and earn a $11 million profit ($12 million in revenue minus $1 million in costs). Assume that having X percent of the total wells means that a company will collect X percent of the total revenue. Refer to Scenario 17-2. If Big Petro Inc. were to drill a second well and Gargantuan Gas also drilled a second well, what would Big Petro Inc.'s profit be? A. $10 million B. $7 million C. $9 million D. $8 million
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Answer it correctly please. I will rate accordingly. This is my last attempt. Multiple votes will be given. Ty-
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