Suppose a firm has the following expenditures per day: $240 for wages,$150 for materials,and $80 for equipment rental.The owner of the firm owns the building in which it operates.If the firm were not operating in the building,he could rent the building for $70 per day.Total daily revenue is $600.
-What are the daily explicit costs for the firm described above?
A) $320
B) $390
C) $400
D) $470

Question

Quizplus · Accepted Answer

Explicit costs are the direct, out-of-pocket payments for expenses like wages, materials, and equipment rental. Here, they sum up to $240 (wages) + $150 (materials) + $80 (equipment rental) = $470. The opportunity cost of the building is not an explicit cost.

Suppose a Firm Has the Following Expenditures Per Day: $240