Which of the following is an implicit cost of production?
A) interest paid on a loan to a bank
B) wages paid to labour plus the cost of carrying benefits for workers
C) the utility bill paid to water, electricity, and natural gas companies
D) rent that could have been earned on a building owned and used by the firm

Question

Quizplus · Accepted Answer

Rent that the firm could have earned on a building it owns and uses is an implicit cost because it represents the opportunity cost of using the building for the production process instead of renting it out to someone else for profit.

A, B, and C are explicit costs because they involve actual out-of-pocket payments to parties outside the firm.

Which of the Following Is an Implicit Cost of Production