Which of the following is an implicit cost of production?
A)interest paid on a loan to a bank
B)wages paid to labor plus the cost of carrying benefits for workers
C)the utility bill paid to water, electricity, and natural gas companies
D)rent that could have been earned on a building owned and used by the firm

Question

Quizplus · Accepted Answer

Rent that could have been earned on a building owned and used by the firm is an implicit cost of production because it is the opportunity cost of using a resource owned by the firm (in this case, the building) for its own production instead of renting it out to generate income. Implicit costs are opportunity costs that are not directly paid for in cash, but instead represent the value of foregone alternatives.

Which of the Following Is an Implicit Cost of Production