Costs incurred by the producer to buy or hire resources are called
A)Implicit costs
B)Explicit costs
C)Opportunity costs
D)Total costs
E)Marginal costs

Question

Quizplus · Accepted Answer

Explicit costs are the actual expenses paid by the producer for buying or hiring resources. It includes items such as wages, rent, materials, and equipment. Implicit costs, on the other hand, are the opportunity cost of using resources owned by the producer instead of renting them out to others. Opportunity costs are the value of the best foregone alternative. Total costs are the sum of explicit and implicit costs. Marginal costs are the additional costs incurred by the producer when one additional unit of output is produced. Therefore, the best choice for the costs incurred by the producer to buy or hire resources is option B - Explicit costs.

Costs Incurred by the Producer to Buy or Hire Resources