Which of the following is an implicit cost in Jim's business venture?
i.the salary Jim could have earned at another job
ii.the interest Jim must pay on the loan he incurred to help open his business
iii.the interest Jim lost when he used his savings to help open his business
A) i only
B) ii only
C) iii only
D) i and iii
E) ii and iii

Question

Quizplus · Accepted Answer

An implicit cost is an opportunity cost arising from foregone alternatives. In this case, the salary Jim could have earned at another job and the interest Jim lost when he used his savings to help open his business are both opportunity costs since Jim could have earned income from alternative uses of his time and money. The interest Jim must pay on the loan he incurred is an explicit cost since it involves a direct payment of money.

Which of the Following Is an Implicit Cost in Jim's