David Owns a Plot of Industrial Land

question 25

Essay

David owns a plot of industrial land. He allows it to be used as a dump site for industrial waste. David eventually finds out that the waste is hazardous. In order to avoid trouble, he sells the land without disclosing to the new owner the issues regarding the hazardous waste. Since David is no longer the owner, will he be subject to investigation in the future? Give reasons for your answer.

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Definitions:

Implicit Costs

The opportunity costs of using resources owned by the firm for its own operations, without direct payment but with foregone opportunities.

Explicit Costs

Direct, out-of-pocket payments for wages, rent, and materials, among others, involved in the production of goods or services.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision or choice.

Implicit Costs

Indirect, non-out-of-pocket expenses which represent the opportunity costs of using resources owned by the firm for its operations.