An example of an implicit cost of production is:
A) the cost of leather used in manufacturing furniture.
B) the opportunity cost of space in your home that is used for a home office.
C) the wages paid to high school students that work in a fast-food restaurant.
D) none of the above.

Question

Quizplus · Accepted Answer

Implicit costs are non-monetary opportunity costs that are not reflected in accounting statements. In this case, the opportunity cost of using the space in your home for a home office represents an implicit cost because it is not a direct monetary expense, but rather a foregone alternative use of that space. Options A and C represent explicit costs because they involve actual monetary expenditures. Option D is incorrect because at least one of the options (option B in this case) represents an implicit cost.

An Example of an Implicit Cost of Production Is