Which of the following is an implicit cost of production?
A)Interest paid on a loan to a bank
B)Wages paid to labour plus the cost of carrying benefits for workers
C)The utility bill paid to water, electricity, and natural gas companies
D)Rent that could have been earned on a building owned and used by the firm

Question

Quizplus · Accepted Answer

Rent that could have been earned on a building owned and used by the firm represents the implicit cost of production. This is because the firm could have earned rent by renting out the building to someone else, but chose to use it for the production process instead. Implicit costs are the opportunity costs of using factors of production that the firm already owns, and which therefore do not involve any direct payment of money by the firm.

Which of the Following Is an Implicit Cost of Production