Many firms have implicit and explicit costs. The difference between them is that implicit costs
A) are taken into consideration for tax purposes while explicit costs are not
B) are the same as explicit costs but are internalized within the firm, such as hiring labor
C) are part of accounting costs while explicit costs are not
D) represent actual money payments to factors of production while explicit costs do not
E) although not involving money payments are the opportunity costs of resources used by the firm

Question

Quizplus · Accepted Answer

Implicit costs do not involve actual money payments but represent the opportunity costs of using resources owned by the firm for its own production instead of earning income elsewhere.

Many Firms Have Implicit and Explicit Costs