Which of the following is an example of something that economists would consider a cost but accountants would not?
A) the cost of materials and supplies purchased by a firm
B) the salary that the firm actually pays to the firm's owner
C) the interest income foregone by the firm's owner because the owner invested funds into the firm
D) the cost of advertising

Question

Quizplus · Accepted Answer

Economists consider opportunity cost as a cost, which is the value of the next best alternative foregone. In this case, the interest income foregone by the firm's owner is the opportunity cost of investing funds into the firm, and economists consider it as a cost. However, accountants may not consider it a cost as it does not involve actual expenditure. Choices A, B, and D are all expenses incurred by the firm and would be considered costs by both economists and accountants.

Which of the Following Is an Example of Something That