Cash payments to a steel mill for steel used in production would be an example of:

Question

Quizplus · Accepted Answer

The cash payments to purchase steel from a steel mill would be considered as explicit costs because they are direct payments made by the firm to outside suppliers for the resources used in production. Sunk costs are costs that have already been incurred and cannot be recovered, fixed costs are costs that do not vary with output, implicit costs are opportunity costs associated with using resources owned by the firm, and entrepreneurial costs are the costs associated with starting and running a business.

Cash Payments to a Steel Mill for Steel Used in Production