An explicit cost is defined as
A)a cost that does not change as output changes.
B)a nonmonetary opportunity cost.
C)a cost that involves spending money.
D)a nonmonetary accounting cost.

Question

Quizplus · Accepted Answer

An explicit cost involves spending money, such as paying for wages, rent, or materials. It is a monetary cost that can be easily identified and accounted for. Therefore, option C is the correct answer. Option A is incorrect because a fixed cost is a type of cost that does not change as output changes, but it does not necessarily have to be an explicit cost. Option B is incorrect because a nonmonetary opportunity cost is an implicit cost, not an explicit cost. Option D is incorrect because a nonmonetary accounting cost does not exist as a concept - accounting costs are always monetary, and they can be either explicit or implicit.

An Explicit Cost Is Defined as