How are implicit costs defined?
A)Accounting profit minus explicit cost.
B)The nonmonetary opportunity cost of using the firm's own resources.
C)The deferred cost of production.
D)Total cost minus fixed costs.

Question

Quizplus · Accepted Answer

Implicit costs are the nonmonetary opportunity costs of using the firm's own resources, such as the value of the owner's time and labor, and the forgone alternative use of resources. Option A refers to accounting profit, which is the difference between total revenue and explicit costs. Option C refers to deferred costs, which are costs that are incurred but not paid immediately. Option D refers to variable costs, not implicit costs.

How Are Implicit Costs Defined