Question

Economic cost of production differ from accounting costs in that A. accounting cost includes expenditures for hired resources while economic cost does not. B. economic cost includes expenditures for hired resources while accounting cost does not. C. accounting costs are always larger than economic cost. D. economic cost adds the opportunity cost of a firm using its own resources while accounting cost does not.

Answer 1

Answer:

D. economic cost adds the opportunity cost of a firm using its own resources while accounting cost does not.

Explanation:

Accounting cost is equal to total explicit Cost. It is the actual cost expended in carrying out a project.

Economic cost is explicit cost plus opportunity cost.

Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.

Economic cost is usually larger than accounting cost.

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