If Jim starts a landscape business and uses a truck and a tractor that he owns to perform landscaping projects,we can conclude that
A)The costs of the truck and the tractor are low
B)That the costs of the truck and the tractor are explicit costs
C)There is no cost to the business since he owns both the truck and the tractor
D)That the costs associated with both the truck and the tractor are implicit costs
E)He should ask his accountant how to handle the costs

Question

Quizplus · Accepted Answer

The costs of the truck and tractor are implicit costs because they represent the opportunity cost of using assets he already owns for the business, rather than what he could earn if he used them in a different way or rented them out.

If Jim Starts a Landscape Business and Uses a Truck