Implicit costs are the opportunity costs of using resources in their next-best alternative use. In this case, the resources are owned by the entrepreneur and could have been used in another business venture or opportunity. The other options listed are not examples of implicit costs.

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Implicit Costs Are

Question 12

Multiple Choice

Implicit costs are:

A) the opportunity costs of using resources owned by the entrepreneur in his/her own business.
B) payments the business owner must make on borrowed funds.
C) costs which vary as the level of output varies.
D) those payments the business owner makes in cash.
E) the payments the business owner makes for public relations, such as donations to charity.

Correct Answer: