Question

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs? Also, a key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Answer 1

Answer:

The opportunity costs are the costs that are being calculated by not taking benefit of the alternatives and all the other options which are joined to it.

These processes are being carried out when it has been chosen from the best alternatives.

Explanation:

• The opportunity cost of an item is referred to as all the items or varieties that must be calculated to gain that item.
• opportunity costs. consists of two costs i.e. Explicit costs and Implicit costs.

A major key difference between accountants and economists is that both of them the economists and the accountants is the way of treatment of their capital costs.

The money which may have been invested or  earned any where else if it had not been included in the business purposes an accountant would never include this.

Therefore, in comparison to an economist the account estimate of total cost will always be less.

Also a production function gives a presentation of relationship between an output and a given input. Graphical way is used for its representation.