Darryl runs a sheep station near Broken Hill. The interest on the debt he incurred to buy his sheep station totals $3,000 per year. For Darryl, the interest is
A) part of his economic profit.
B) his normal profit.
C) an implicit cost.
D) his normal cost.
E) an explicit cost.

Question

Quizplus · Accepted Answer

The interest on the debt is an explicit cost because it is a direct, out-of-pocket payment that Darryl must make for the financing of his sheep station.

Darryl Runs a Sheep Station near Broken Hill