Costs associated with some decisions by the firm that are additional costs that a firm would incur if it took one course of action rather than another are called:
A) incremental costs
B) implicit costs
C) fixed costs
D) historical costs
E) opportunity costs

Question

Quizplus · Accepted Answer

Incremental costs are costs that are incurred as a result of a particular decision or choice made by the firm. These costs are additional costs that the firm would not have incurred had it chosen a different course of action. Implicit costs are the opportunity costs of using a resource already owned by the firm, fixed costs are costs that do not change with the level of output, historical costs are costs that have already been incurred by the firm, and opportunity costs are the benefits foregone by choosing one option over another. Therefore, incremental costs best describe costs associated with some decisions by the firm that are additional costs that a firm would incur if it took one course of action rather than another.

Costs Associated with Some Decisions by the Firm That Are