Question

"The amount of money that could have been earned by leasing a piece of land to a developer to build a multi-story office building instead of leaving it vacate to protect your view of the city skyline is called:"

Answer 1

Answer:

The options for this question are the following:

A. implicit cost

B. accounting cost

C. explicit cost

D. pure economic cost

E. positive economic rent

The correct answer is A. implicit cost .

Explanation:

Implicit cost is an economics term that refers to the costs of a business that do not require direct spending but, instead, the result of a loss of potential revenue. This concept can have important ramifications for companies and entrepreneurs when they decide how to divide tasks between their workforce and how much they charge for their services. It is also an important concept for individuals to understand when choosing the best time budget for a variety of projects.

The implicit cost of some companies is generally a result of the amount of time it takes a person to complete the business and the time value of that person. For example, if someone hires an independent contractor to complete a plumbing job, that contractor must charge enough to cover their explicit and implicit costs in order to make a profit. The explicit costs will be the cost of the necessary materials, which is quite easy to calculate.

Answer 2

Answer:

The correct answer is letter "A": Implicit Cost.

Explanation:

An Implicit Cost is any cost associated with failing to take any action. Implicit costs are hard to calculate. It contrasts with an explicit cost, which can be quantified because at some point it includes a transaction tied to cash exchange. From an economist's point of view, total economic profit includes both explicit and implicit costs.