An example of an implicit cost of production is:
A) the cost of raw materials used to produce bread in a bakery.
B) the cost of labor in a factory that assembles DVD players.
C) the income an entrepreneur could have earned working for someone else.
D) all of the above.

Question

Quizplus · Accepted Answer

Implicit costs are opportunity costs, meaning they are the benefits that are missed out on when choosing one option over another. In this case, the income that an entrepreneur could have earned working for someone else is a cost that is not directly incurred, but is still a real cost of choosing to start their own business instead. The cost of raw materials and labor are both explicit costs, as they are already included in the accounting statements.

An Example of an Implicit Cost of Production Is