Explicit costs

Question

Explicit costs

Quizplus · Accepted Answer

Explicit costs are the direct expenses that a firm pays in order to produce or acquire a good or service. They require an outlay of money, such as wages, rent, utilities, and materials. Therefore, choice A is the correct answer. Choice B is incorrect because explicit costs do not include all of the firm's opportunity costs, only the ones that require a cash payment. Choice C is also incorrect because income forgone by the firm's owners is an implicit cost, not an explicit cost.

Explicit Costs