Paul's Plumbing is a small business that employs 12 people. Which of the following is the best example of an implicit cost incurred by this firm?

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An implicit cost is a cost that is not visible or explicit, but rather consists of opportunity costs of using resources owned by the firm. In this case, the accounting services provided by Paul's wife, who is an accountant, are not paid for by the firm, but represent a cost that the firm incurs because Paul's wife could be using her time to earn money elsewhere. The other options, such as tax payments, wages, and payroll taxes, are explicit costs that are easily identifiable and measurable.

Paul's Plumbing Is a Small Business That Employs 12 People