Which of the following is an example of an implicit cost?
A) Interest paid to a bank on a building loan.
B) Liability insurance payments made only once a year.
C) The cost of using capital an owner donates to the business.
D) Dollars paid to a supplier for materials used in production.
E) Wages paid to employees.

Question

Quizplus · Accepted Answer

An implicit cost is an opportunity cost of using resources that a firm already owns in its business, and thus does not involve a direct cash outflow. The cost of using capital that an owner donates to the business is an example of an implicit cost.

Which of the Following Is an Example of an Implicit