Question

Explicit costs are payments the firm makes for A. inputs such as wages and salaries to its employees, whereas implicit costs are nonexpenditure costs that occur through the use of self-owned resources such as forgone income. B. inputs such as wages and salaries to its employees, whereas implicit costs are expenditure costs that occur for services such as travel expenses for its employees. C. outputs such as desks for its employees, whereas implicit costs are expenditure costs that occur for services such as travel expenses for its employees. D. outputs such as desks for its employees, whereas implicit costs are nonexpenditure costs that occur through the use of self-owned resources such as forgone income.

Answer 1

Answer:

The correct answer is option A.

Explanation:

Explicit cost is the direct cost incurred on the inputs such as wages and salaries, raw materials, etc. While on the other hand, the implicit costs are the indirect costs incurred through the use of self-owned resources such as foregone income.  

Implicit costs are the opportunity cost of using a self-owned resource that could have been alternatively used to generate some income.  

Explicit costs are considered in computing accounting profits, the implicit cost is not considered.