Economic costs of an input include
A) only implicit costs.
B) only explicit costs.
C) both implicit and explicit costs.
D) whatever management wishes to report to the shareholders.

Question

Quizplus · Accepted Answer

Economic costs of an input include both implicit and explicit costs. Explicit costs are the actual monetary expenses incurred by a firm, such as wages, rent, and supplies. Implicit costs, on the other hand, refer to the opportunity cost of using the firm's resources to produce a particular good or service instead of using them for alternative purposes. Both of these costs are relevant in economic decision making and are necessary to determine the true cost of production. The answer D is incorrect as the costs reported to shareholders may not reflect the true economic costs of production.

Economic Costs of an Input Include