The most appropriate choice for revenue and profit will be given by-
Profit expected from a 100-well drilling program = $
What is revenue and profit?
Total income generated by sale of goods and service is called revenue.
If is the cost of producing one unit of a commodity and
is the number of units of the commodity, then the product of
and
gives the revenue.
If the revenue obtained by selling a commodity is more than the cost, difference between revenue and cost gives the profit.
Here,
Number of economic wells = 11
An economic well produces an average income of $23
Revenue obtained = $
Number of dry wells =
=
Average cost of a dry hole is $1.2 million
Cost of 89 dry holes = $
= $
Profit = Revenue - cost
= $
= $
Profit expected from a 100-well drilling program = $
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Complete Question
The diagram has been attached
Assume a profitable economic well produces an average income of $23 million, while the average cost of a dry hole is $1.2 million. How much profit can be expected from a 100-well drilling program?
