Fact Pattern 18-1 Prudence Wants to Develop a Shopping Center in Her Town

question 11

Multiple Choice

Fact Pattern 18-1
Prudence wants to develop a shopping center in her town. She is very interested in developing the center at the location of an old dump. She can purchase the property cheaply, and it is near one of the fastest growing areas of the city. She is concerned, however, about being held liable for all cleanup costs. She has heard about federal and state funds that may be available; but she is concerned that if she purchases the property knowing that contamination is likely there, she will not be eligible to participate in government assistance programs for cleanup. She decides to discuss her problem with Bruce, a law student studying environmental law.
-Refer to Fact Pattern 18-1.What should Bruce advise Prudence regarding her plans?

• A) That she should forget the project because she would be ineligible for any cleanup assistance and, as owner, would be individually liable for the entire project.
• B) That she should buy the property without any investigation and deny knowledge of contamination if later questioned because under federal law she can only be held liable if she had full and informed knowledge of contaminants when she made the purchase.
• C) That she should incorporate because while an individual is liable for the entire costs of cleanup, a corporation is not.
• D) That by taking appropriate steps to become a bona fide prospective purchaser, she can avoid liability for legacy contamination.

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Definitions:

Utility Function

A mathematical representation of a consumer's preference ranking for a set of goods or services, showing the level of satisfaction or utility derived from each combination of goods.

Doggerel

Verse or words that are poorly written or expressed, often characterized by irregularities or crudeness.

Paasche Price Index

The Paasche Price Index is a consumer price index used to measure the change over time in the prices of a basket of consumer goods and services, weighted by the purchases made in the current period.

Doggerel

A term unrelated to economics, referring to irregularly or poorly constructed verse, often of a humorous or trivial nature.